Reducing Energy Costs for a Catering Business

Why Catering Businesses Use So Much Energy

Commercial kitchens are among the most energy intensive business premises you can operate. Unlike an office or retail unit where lighting and heating make up most of the bill, a catering business runs multiple high powered appliances simultaneously, often for twelve hours or more each day.

Consider what a typical kitchen contains: commercial ovens and ranges, deep fat fryers, grills, bain maries, blast chillers, walk in fridges, walk in freezers, dishwashers, extraction systems, and hot water on demand. Each piece of equipment draws significant power, and most cannot simply be switched off during service hours.

Refrigeration runs constantly. Extraction fans operate whenever cooking takes place. Ovens need preheating time before service begins. This combination means a catering business can easily use five to ten times more energy per square metre than a standard commercial unit. Understanding this from the outset helps you plan realistically and prioritise energy management as a genuine cost control measure rather than an afterthought.

How Business Energy Contracts Work

If you are moving from domestic energy bills to a commercial supply, the contract structure will be unfamiliar. Business energy agreements differ from home tariffs in several important ways.

Most business contracts run for a fixed term, typically one to five years. During this period your unit rates are locked in, which can protect you from market price rises but also means you cannot easily switch if prices fall. Fixed rate contracts offer budget certainty, while variable tariffs track wholesale prices, carrying more risk but potential savings if the market drops.

The critical point comes at contract expiry. Unlike home energy where you roll onto a standard variable tariff, business contracts typically move you onto out of contract or deemed rates. These rates can be dramatically higher than your original deal, sometimes double or more. The good news is that once on deemed rates you can switch at any time without penalty, but acting quickly matters because every day on these inflated rates costs you money.

Suppliers typically require notice within a specific window, often 30 to 90 days before the end date, if you want to negotiate a new deal while still in contract. Missing that window means you will land on deemed rates until you arrange a replacement contract.

Another consideration is broker commission. Many businesses arrange energy contracts through brokers, which can save time. However, broker fees are usually built into the unit rate you pay rather than invoiced separately. This means you may not realise how much commission you are paying or whether it represents good value. Ofgem does not currently regulate broker conduct in detail, so always ask brokers to disclose their commission in writing before signing anything.

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Practical Ways to Reduce Energy Use in Your Kitchen

While you cannot eliminate energy use in a commercial kitchen, you can reduce waste significantly through sensible practices and investment.

• Schedule preheating carefully. Ovens and grills switched on hours before service waste energy. Time your preheating based on actual need.
• Maintain equipment properly. Dirty filters on extraction systems, blocked condenser coils on fridges, and poorly sealed oven doors all increase energy consumption.
• Check fridge and freezer temperatures. Running colder than necessary wastes power. Use thermometers to verify settings match food safety requirements without overcooling.
• Batch dishwasher loads. Running half empty cycles doubles your water heating costs for the same output.
• Consider equipment efficiency when replacing items. Modern commercial appliances often use considerably less energy than older models. Check the energy rating before purchasing.
• Install LED lighting throughout. Kitchen areas need good illumination for safety, but LED replacements cut lighting costs substantially.
• Review your extraction system. Variable speed fans that adjust to cooking activity use less power than systems running at full capacity constantly.

Stay Ahead of Your Contract Renewal

One of the simplest ways to avoid unnecessary costs is knowing when your energy contract ends and diarising a reminder to review it at least three months beforehand. This gives you time to compare options, negotiate with your current supplier, or arrange a switch without landing on expensive deemed rates.

If you find yourself already on out of contract rates, act immediately. Gather recent bills showing your consumption, request quotes from multiple suppliers, and consider whether a broker could help, provided you understand their fees upfront.

If you arranged your current contract through a broker and want to understand what commission might be embedded in your rates, try our free Hidden Energy Broker Commission Checker to help you assess your current deal.

Energy will always be a significant cost for any catering operation, but staying informed about your contract terms and managing usage sensibly can make a real difference to your margins over time.