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Powering Down Energy Use

Au Bon Pain's energy-purchasing tactics include negotiating price, auditing past utility bills and sharing consumption best practices.

By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 6/1/2008

Au Bon Pain

Au Bon Pain worked with an energy procurement consultant to find the best utility prices and ways to reduce energy consumption in the stores.

At a time when every bit of margin matters, purchasing executives are struggling to balance costs with customer expectations. One area guests won't see cutting is in energy use.

Wade Winters, vice president of purchasing for Boston-based Au Bon Pain, wonders why a focus on utility costs isn't more prevalent. “We should have been pursuing it years and years ago. Why does it take the worst of times to understand that this is an opportunity?” he asks.

Opportunity it is, if the bakery-cafe's experience is any indication.

Working the Inside

Winters hired Gary Markowitz of Lexington, Mass.-based Kilojolts to identify energy-saving opportunities for Au Bon Pain's 122 domestic company-owned restaurants. The energy-procurement consultant works with utility brokers to get the best prices on electricity and gas. “Because we don't purchase energy, it's kind of a new concept,” Winters explains. “We don't necessarily have the insight or expertise to know the ins and outs of that particular category.”

“This is a well-spent consulting fee,” Winters says without specifics, adding that over the past 12 months, the savings has been worth it. Though he's been warned that not even brokers will be able to help reduce costs for the next six to 12 months.

Au Bon PainFortunately for Au Bon Pain, the consulting goes beyond finding the best prices. Kilojolts is also auditing past utility use. Winters explains that usually bills come in from the utility companies, and the company simply pays them. The audit will examine previous invoices to check for mistakes. “They know what to look for,” he says of the consulting firm.

In cases where utilities are billed through the landlord, the consultant will research comparable rates in the market to determine if the fees are fair. If something seems off, Au Bon Pain will ask for documentation from the landlord.

“We're confident that landlords will cooperate,” Winters says. “If it's a mistake, I can't see why they wouldn't make good on it.” He points out that the landlords themselves may have been overcharged, and “maybe we're doing them a favor by recognizing it.”

Still, the company is examining lease terms going forward to ensure the company is able to audit utility costs.

Lowering Demand

Au Bon Pain is also working to lower its energy costs by reducing its consumption. Kilojolts is helping identify best practices in not only the restaurants but the support center and manufacturing facility as well.

Snapshot

Concept Au Bon Pain

Headquarters Boston

Units 122 company, 60 franchise in U.S.

2007 Systemwide Sales $300 million

Average Check $4.71

Expansion Plans 12 to 15 in 2008, including 6 in Dubai and Kuwait

For example, some stores leave the conveyor toaster on all day, but they would save energy by using a four-slot toaster during slow times. Winters points to the habit of some managers to turn everything on when they walk in the door in the morning; they could save energy by turning lights and equipment on only when necessary.

While the consultant will help point out such areas, Au Bon Pain will follow up and roll out new operating procedures or training. Winters would like to see reduced energy costs tied to manager bonuses. “Reward drives compliance,” he says.

  Au Bon Pain also shares best practices with its franchisees, which operate 60 units, and will incorporate them into new restaurants.

“The way market conditions are, with commodity costs, there are very little directions to turn to become more efficient and create cost savings,” Winters says, adding that he would rather save a few cents by using less energy than by using lower-quality ingredients.

“There's something to be said for when times are tough,” he says. “It makes you more efficient than you ever would be.”

i_

One Answer Is Blowing in the Wind

BurgervilleVancouver, Wash.-based Burgerville, a quick-service chain famous for using locally sourced ingredients, has been purchasing wind-energy credits since summer 2005. Jack Graves, chief cultural officer for parent The Holland Inc., which operates 39 restaurants in Washington and Oregon, explains that it began as part of the company's mission to impact communities in a positive way.

“People in the Northwest are very concerned about the environment,” he says. “We knew that would add value to our product.”

The company pays a premium for the credits, but Graves says Burgerville is seeing two to three times the sales increases its competitors are and has had two-and-a-half years of double-digit increases, “and we believe another year this year.”

Willing to share the wealth, The Holland has been asking the companies it does business with to follow its lead. Graves says about half-dozen now purchase wind-energy credits, thanks to The Holland's influence, and that the company has also helped enroll at least 2,000 consumers in Portland.

Looking ahead, Graves says Burgerville is trying to design a building that would have no energy draw at all. Meanwhile the two units expected to open this year will follow the company's best conservation practices so far.

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