As we enter 2024, the global food service industry — a $2.3 tn powerhouse projected to reach well above $ 5 tn by 2030 with a Compound Annual Growth Rate (CAGR) of 10.79%1 stands at a crossroads. One main driver of this growth is the restaurant sector, which is thriving and expanding in new directions every day. On average, Europeans spend 6.7% of their annual budget on eating out2. Yet economic turmoil, evolving consumer expectations, and climate change are squeezing restauranteurs’ margins to the breaking point.
Further compounding the problem is the burdensome increase in energy spending. Restaurants consume three times more energy per square meter than other commercial enterprises3. Demanding use of energy intensive commercial kitchen appliances, extensive hours of operation and even wasteful practices lead to significant energy usage. This is hard on the planet as well as restaurants’ balance sheets.
To deal with these pressures, restaurant owners are increasingly turning to sustainable kitchen solutions to improve their bottom line. According to the Carbon Trust, even moderate improvements to efficiency in restaurants can bring energy savings of around 20 per cent.4
One study of pubrestaurants by the University of Reading shows an average 63% of the premises’ electricity consumption was attributed to the catering activity. 5 Another study, by the US Energy Information Administration, suggests 40% of daily electricity consumption in the kitchen is attributed to cooking and 15% to refrigeration. 6 Savings can undoubtedly be made.
Middleby: a company for today and tomorrow
Middleby (NASDAQ:MIDD), a world leader in developing advanced innovation and solutions for commercial, residential, and industrial foodservice, is addressing these issues head on. With more than 120 brands in three complementary business segments, Middleby innovates, manufactures, and markets its solutions worldwide. As of mid December 2023 the company is valued at $7.5 bn.
Middleby reports its customers are continually seeking innovative solutions to address their Sustainability priorities and reduce costs: “With a pressing need to put strategies into place to achieve their long term goals, our partners are experiencing a rising demand from their stakeholders to develop and implement sustainable solutions.” To meet this need, the company offers a range of sustainability solutions focused on induction and electrification, ventless cooking, energy and data management, holding and speed cooking to reduce food waste, water usage minimization, and chemical free cleaning.
For example, TurboChef by Alkar is a Middleby product that has proven high resource efficiency and cost saving potential. Thanks to its modular construction it is the only industrial oven worldwide with the unique flexibility of microwave, convection and steam heating. Compared to traditional standard appliances the TurboChef offers a cooking efficiency resulting in 67% less energy consumption, 50% less wastewater and 75% less cooking time. This leads to an amazing amortization period of only 21 months.7
Sustainability has become a buzzword in the restaurant industry, with more and more customers demanding eco-friendly practices from their favorite establishments – not only when it comes to the use of disposables, but also when it comes to resource efficiency. Moreover, the latest building regulations set new standards for energy efficiency including a CO2 reduction for non domestic buildings. Sustainability and environmental stewardship will inform the direction of the restaurant industry more than ever in the coming years as cost savings can no longer be ignored.
The kitchen of the future
The decisions made in kitchen planning, design and installation can have a significant impact on the overall sustainability performance of restaurants. Middleby’s Open Kitchen leverages IOT (Internet of &Things) to connect different components of commercial or institutional kitchens in one cloud based system — from refrigeration to HVAC to fryers. This smart technology helps managers reduce energy consumption, enhance efficiency and optimize cold chain management as well as workflow processing. It works by monitoring and reporting real time data on energy usage that allows for instant modifications. For example, if there’s consistently a lull in service between the hours of 3 – 4 operators will know this and be able to make modifications to equipment on/off schedules. With ranges, refrigeration, HVAC, and other foodservice equipment being top electricity and natural gas users, any reduction in consumption levels can help lower overhead costs and enhance the bottom line.
By implementing Open Kitchen technology from Middleby subsidiary Powerhouse Dynamics the US national convenience restaurant chain Arby’s was able to save about 30 percent on electricity consumption totaling more than $40 million in savings from 2011 to 2018.8
The fewer resources an oven or refrigerator uses, the less impact the operation will have on the environment. Restaurant sustainability practices most certainly extend to the equipment used in the restaurant, so finding units that use less water, provide greater gas or electricity savings, or operate only when required is advantageous for reducing utility costs.
One of the three core pillars of Nordea’s Global Climate and Environment Strategy is resource efficiency. Many companies that offer products and services in this area seek both attractive value propositions and strong environmental benefits. We truly believe that investing in companies that use technology and innovation to save resources and improve efficiency is a win for investors and the planet.
1Fortune Business Insights 2Statista 2023, Share of household expenditure spend on eating out in the EU 2020 3U.S. Energy Information Administration 2018 4Utility Bidder: How much energy does an average restaurant use? 5University of Reading: Electricity use in the commercial kitchen 6US Energy Information Administration, 2018. https://www.eia.gov/todayinenergy/detail.php?id=60241 7Middleby December 2023 Investor Presentation. Calculation based on data provided on turbochef.com. Conditions: 12 hours operating time per day, cook cycle: 240 seconds, 400 meals per day, energy cost: 0.25 USD / kWHR. 8Source: Middleby & Powerhouse Dynamics. “Using the Internet of Things to Enable the Smart Connected Enterprise – A Case Study on Arby’s”, January 2022. Savings cumulated over the time period from 2011 to 2018.
*according to MiFID definition
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