The owner wanted an answer to one simple question — not a sales pitch. This is what an independent review of their electricity and gas arrangement actually looked at, and what it found.
At a Glance
Running a restaurant means keeping a close eye on costs. Food, staffing, rent and supplier prices all affect margins, but energy is another significant overhead that can easily be overlooked.
For restaurants in particular, electricity and gas consumption can be substantial. Refrigeration, cooking equipment, extraction, lighting, heating and other equipment may be operating for long periods every day.
In this example, the owner of an independent Lancashire restaurant wanted an answer to one simple question:
Are we paying a competitive price for our business energy?
The purpose of the review wasn't to persuade the restaurant to change supplier. It was simply to establish whether its existing energy arrangement still represented good value.
The restaurant had been operating successfully for several years.
Like many hospitality businesses, the owners spent most of their time concentrating on the things that mattered immediately — customers, staff, food costs, suppliers and the day-to-day running of the restaurant.
The energy bills were being paid each month, and there wasn't an obvious problem with the supply. But the energy arrangement hadn't been independently reviewed for some time.
The owner had also noticed that energy expenditure had increased and wasn't sure whether this was simply due to usage and market conditions, or whether the existing contract could potentially be improved.
Rather than assuming the restaurant was overpaying, the first step was to look at the account properly.
A business energy review involves looking beyond the total amount shown at the bottom of an invoice. For this restaurant, the review considered several areas.
The rates being charged for the electricity and gas consumed. For a business with relatively high annual consumption, even a modest difference in the unit rate can have a noticeable effect over a full year.
The daily standing charges attached to the supply. Looking at the unit rate alone doesn't always give a complete picture of the overall cost of an arrangement.
The consumption profile, so any comparison reflected how the business actually uses energy. A busy restaurant and a small office can have very different requirements.
The existing contract position and the relevant dates. Ofgem explains that business contracts can be fixed, variable, rollover, deemed or out-of-contract, and what happens at the end depends on the terms.
Finally, the existing arrangement was compared against other potentially suitable options available at the time of the review.
The question being asked matters more than it might first appear:
“Which supplier can we move this restaurant to?”
“Does the restaurant's existing arrangement still represent competitive value?”
After reviewing the restaurant's existing arrangements, the analysis identified that the current pricing was higher than some of the alternative options available for its consumption profile.
This didn't mean the existing supplier had necessarily done anything wrong. It simply showed why periodically reviewing a commercial contract can be worthwhile — an arrangement that was appropriate when it was originally agreed may not remain the best fit indefinitely.
The review gave the owner the opportunity to compare their existing position with other options before deciding what to do next.
in potential annual savings, based on this restaurant's consumption
This is a potential saving, not a guaranteed one. What an individual business could save depends on its existing contract, consumption, rates, contract timing and the options actually available when the review takes place.
Having your energy bills reviewed doesn't mean you have to change supplier.
Sometimes a review identifies an opportunity to reduce costs.
Sometimes there's a better contract structure available from the existing supplier.
And sometimes the conclusion is simply that the business already has a competitive arrangement.
If that's what the review shows, that's what I'll tell the business. The purpose is to give the owner enough information to make an informed decision — not to encourage a change for the sake of changing.
It's important for businesses to know when their existing energy agreements end.
Ofgem explains that, depending on the contract, a business whose agreement ends without another arrangement being agreed may move onto a deemed or out-of-contract arrangement, while some contracts contain rollover provisions.
Business energy contracts can also run for several years, and suppliers will generally not allow a business to switch before the end of a fixed contract.
That's why I believe businesses should understand their contract position before the renewal becomes urgent. For a restaurant owner it's very easy for this to get pushed down the priority list — there's always something else requiring attention. But knowing the contract end date gives the business time to understand its options rather than making a rushed decision.
Source: Ofgem guidance on business energy contracts.
The lesson from this example isn't “every restaurant can save £2,340.” That wouldn't be true.
Don't assume that because your energy supply is working and the bills are being paid, your existing contract must still represent good value.
If you run a restaurant, takeaway, café, pub or another hospitality business, it's worth understanding:
Ofgem's guidance similarly recommends understanding the type and terms of a business energy contract, and checking fees, supplier coverage and contract terms when working with an energy broker.
This is something I want businesses to understand about an independent review. Not every review needs to produce a saving. If your existing arrangement is already competitive, the honest answer is to leave it alone — and that answer is worth just as much as a saving.
A free, independent review of your current electricity and gas arrangement. If it's already competitive, I'll tell you that.
Request a free energy reviewNo cost. No obligation to switch supplier.
The figures in this case study are based on an example review and are illustrative. Savings identified are potential savings, not guaranteed savings, and will vary depending on a business's existing contract, unit rates, standing charges, consumption and the options available at the time of review.
