By Jay Fiske, President, Powerhouse Dynamics
High energy prices are a perennial challenge for restaurant managers. According to a 2025 U.S. Energy Information Administration analysis, retail electricity prices, which have often grown faster than the rate of inflation, will continue rising through 2026. This is challenging for foodservice operators because the capital equipment they depend on—from HVAC to refrigeration—is energy-intensive. Quick-service restaurants (QSRs), in particular, can use up to 10 times as much energy per square foot as businesses in other industries.
This forces restaurants into a perpetual juggling act. To maximize their margins, they need to optimize their energy spending. At the same time, they cannot allow any cost reductions to interfere with their most important “product”—a consistently exceptional guest experience. The environment must be comfortable; food must be fresh, delicious, and safe; and the inability to serve popular specials due to equipment breakdowns is not an option.
There is a way for CIOs and CTOs to balance both priorities. The same equipment that consumes significant amounts of energy can also provide the data foodservice operators need to reduce their energy usage and make every diner’s visit a positive one. “Smart” energy management systems (EMS) based on Internet of Things (IoT) technologies make this data accessible.
These EMS solutions enable multi-unit restaurant facility managers to connect, control, and monitor the condition and performance of their capital equipment across dozens, hundreds, or thousands of sites. Many restaurants choose a subscription-based EMS model. In that case, installation crews visit each site with the necessary sensors and controls and connect restaurants’ equipment to the cloud. Normally, this takes no more than a day at each location.
Once food service operators install these systems, they have immediate access to actionable equipment data, a variety of dashboard reports, and urgent alerts to outliers, such as a freezer exceeding its maximum temperature setting. One brand with more than 800 locations saved more than $20 million in energy costs by paying close attention to these analytics, and remediating previously undetected inefficiencies. Their system helped them uncover struggling rooftop air conditioning units, short cycling compressors, and malfunctioning economizers.
Restaurants also use the data to:
Improve preventive maintenance
A strong preventive maintenance program not only keeps equipment running at peak efficiency and extends its useful life; it also prevents much costlier issues later. Our research indicates that proactive maintenance often costs one-third as much as reactive maintenance. Equipment data accessible through an EMS surfaces opportunities to preempt larger expenses by remediating a problem when it first occurs. Frost build-up in freezers, for example, may signal a breakdown waiting to happen. A walk-in compressor that is cycling more than 80% of the time could fail prematurely without a quick service call.
Sometimes preventive maintenance does not require a service call at all; it just requires some extra staff attention onsite. When a refrigerator that’s two years old has trouble cooling down, cleaning its coils may increase its efficiency by up to 30%. EMS data surfaces improvement opportunities like this.
Drive down electricity costs
During summer’s hottest days, it’s natural for restaurants to power up all their air conditioning units simultaneously. That’s a recipe for increasing their peak demand charges, which can comprise 20-30% of their monthly electric bills. These charges are based on the highest amount of power used within a set interval, commonly 15 minutes. Many restaurants integrate AI solutions with their HVAC equipment to lower demand costs. The solutions sequence HVAC loads while accounting for restaurants’ typical equipment usage, weather changes, air temperature standards, and more. Many operators reduce their electric bills by an additional 5-10% by incorporating this technology.
Fix problems with the first truck roll
Newer EMS systems can diagnose many equipment issues, down to the specific component that should be replaced. This empowers technicians to make a service call with the correct parts in the truck. Restaurants save more than once—by restoring their equipment to peak efficiency and by eliminating the cost of an additional service call.
Identify opportunities for staff coaching
When one restaurant with an EMS noticed anomalies with their oven temperature data and conducted some additional “forensics,” they discovered that some kitchen staff were cooking food before it was fully defrosted. This was a violation of standard operating procedures and could have compromised food quality and safety if not caught in time, leading to closures and reputational damage. Luckily, management was able to stop the problem before food reached diners and ensure that kitchen staff understood proper procedures.
Additional benefits
EMS solutions also enable restaurants to automate temperature and lighting set points enterprise-wide. Operators can typically expect a 10-20% reduction in their energy bills as a result. The automation frees kitchen staff from routine tasks such as adjusting thermostat settings—increasing their efficiency while enabling them to focus on the experience of their diners.
When the dining experience is always outstanding, restaurants’ financial performance soars. IoT-based energy management systems help foodservice operators save energy costs while helping to drive more sales from satisfied customers.
This article originally appeared in Hospitality Technology.
