5 Energy Procurement Strategies for Multi-Location Franchises

Managing energy costs is a critical component of operational efficiency for multi-location franchises. Given the complex and often disparate energy needs of businesses that operate across multiple sites, such as retail chains, restaurants, and hospitality establishments, implementing effective energy procurement strategies is essential for minimizing the financial impact on your bottom line.

Multi-location franchises face a multitude of energy procurement challenges. Among them are unique energy consumption patterns, influenced by regional regulations, utility providers, and operational hours.

Energy costs are a substantial expense for franchise owners with more than one location. In the retail sector, energy is the fourth largest in-store operating cost. Restaurants use approximately 2.5 times more energy per square foot than other commercial buildings.

High energy costs strain budgets, especially given the slim profit margins in industries like retail and hospitality, where net profits ranging from 3.9% to 10.5%.

Effective energy procurement strategies can produce significant cost savings, streamline energy management processes, and enhance sustainability. This operational efficiency approach allows franchises to allocate more resources to core business operations and growth initiatives.

Strategy 1: Centralized Energy Procurement

Centralized energy procurement is a strategic approach that benefits multi-location franchises by streamlining processes, reducing costs, and boosting operational efficiency. This method is particularly beneficial for retail chains, restaurants, and hospitality establishments interested in lowering energy bills without compromising customer satisfaction.

Implementing a centralized energy procurement system offers numerous benefits for multi-location franchises. One of the most immediate advantages is cost efficiency through bulk ordering and volume discounts. Franchises gain significant bargaining power with suppliers by consolidating orders from multiple locations. This approach directly translates into procurement savings throughout the entire organization.

Centralized procurement allows franchises to cultivate strong, reliable relationships with a handful of preferred suppliers. These long-term partnerships provide deeper insights into suppliers’ production schedules, quality standards, and logistics capabilities, ensuring smoother and more predictable operations.

How to implement a centralized procurement system

Implementing a centralized procurement system requires careful planning and execution. The first key step is to assess your current energy usage by analyzing energy consumption patterns across locations. Energy procurement specialists use that data to identify opportunities for energy optimization.

Other parts of the process include:

• Establishing a centralized team. Create a dedicated team responsible for managing energy procurement for all franchise locations. They’re the go-to people to work with energy procurement specialists hired to optimize savings.
• Standardizing the process. With the help of energy procurement specialists, develop uniform procedures for energy purchasing and management across all sites to maximize savings.
• Leveraging the power of technology. Artificial intelligence (AI) and the Internet of Things (IoT) offer effective tools for boosting energy savings strategies. Energy management systems (EMS) are just one way to monitor and control energy usage remotely using AI and IoT.
• Training franchise staff. Educate your employees across all franchise locations on energy-saving practices and how any new centralized energy management systems work.
• Reviewing and optimizing regularly. Continuously monitor and adjust your energy procurement strategy. Tweak any methods that aren’t producing ongoing efficiency and cost-effectiveness.

Strategy 2: Energy Market Analysis and Forecasting

Energy market analysis and forecasting help multi-location franchises optimize energy procurement to reduce spending. Franchise owners can make informed decisions that lead to cost savings, risk mitigation, and improved operational efficiency by understanding market trends, price fluctuations, and energy demand patterns.

This is where an energy procurement specialist can help. They use a proactive approach to help businesses stay ahead of market volatility, secure favorable contracts, and align energy procurement strategies with long-term business goals.

Market analysis in energy procurement

Market analysis is your secret weapon for navigating the complexities of energy procurement. Several factors influence energy markets, including supply and demand dynamics, geopolitical events, weather patterns, and regulatory changes.

Conducting a thorough market analysis:

• Identifies cost-saving opportunities. Businesses can pinpoint periods of lower energy prices by analyzing energy market trends to negotiate more favorable energy contracts. Market analysis also helps franchises identify opportunities to integrate renewable energy sources into their energy procurement strategies while balancing costs.
• Mitigates risks. Understanding potential price spikes or supply shortages allows franchises to take preemptive measures, such as locking in fixed-rate energy contracts or diversifying suppliers.
• Strengthens negotiation power. Armed with market insights, franchises can negotiate more favorable terms with energy providers.

How to forecast energy demand and prices

Accurate forecasting of energy demand and prices is essential for creating an effective energy procurement strategy. Analyzing historical data that includes past energy consumption patterns across all franchise locations helps identify trends related to seasonality, business operations, or external factors like the weather. Energy procurement specialists can assist with this process.

After analyzing historical data, franchises must:

• Monitor external factors such as fuel prices, regulatory changes, economic conditions, and technological advancements that can impact energy costs.
• Factor in future expansion plans or other operational changes that could influence energy demand at specific locations.
• Collaborate with energy procurement consultants who specialize in forecasting to gain deeper insights into energy market dynamics and pricing trends.

Strategy 3: Negotiating with Energy Suppliers

Multi-location franchises interested in optimizing their energy expenses must negotiate with energy suppliers. Effective negotiation can lead to significant cost savings, more favorable contract terms, and a better overall energy management strategy. Franchises can often secure better deals than individual businesses by leveraging their size and multi-location status.

A winning approach for negotiating with energy suppliers is to come prepared with a thorough understanding of your energy needs, market conditions, and potential alternatives. This is where collaborating with an energy procurement specialist can strengthen your position to help secure the best possible terms for your franchise.

Understanding contract terms and clauses

A comprehensive understanding of contract terms and clauses empowers franchise owners to make informed decisions and avoid potential pitfalls.

Understanding the difference between fixed, variable, and indexed pricing options. Each has its advantages and risks, depending on market conditions and your risk tolerance.

Consider the pros and cons of short-term versus long-term contracts. Longer contracts may offer price stability, while shorter ones provide more flexibility.

Some energy suppliers use minimum and maximum consumption clauses. Ask if these consumption thresholds are part of any contract before signing. If they are, make sure they align with your franchise’s energy usage patterns across all locations to avoid surprise fees.

Lastly, pay attention to automatic renewal clauses and termination notice periods. These can significantly impact your ability to switch suppliers or renegotiate terms.

Building relationships with energy suppliers

Building strong relationships with energy suppliers can yield numerous benefits for multi-location franchises. While it’s important to maintain a professional and objective approach during negotiations, fostering positive relationships can lead to better service from suppliers who are more likely to prioritize your needs and respond quickly to issues.

Strong relationships also lead to early information about market trends or upcoming changes in pricing structures that can impact your energy savings. Suppliers may also be more willing to accommodate special requests or offer customized solutions for valued clients.

Maintaining solid ties with your energy suppliers takes a lot of time and effort. An energy procurement specialist can handle this task on your franchise’s behalf, establishing and building these important relationships as part of your overall energy procurement strategy.

Strategy 4: Implementing Energy Efficiency Measures

Multi-location franchises interested in reducing energy expenses while improving their environmental footprints may wish to explore implementing energy efficiency measures. Franchise owners can significantly lower their energy consumption to achieve cost savings across all locations by adopting energy-efficient technologies and practices.

Energy efficiency measures can range from simple changes in daily operations to more significant investments in advanced technologies. Some common energy-efficient practices include:

• LED lighting upgrades
• Smart HVAC systems with programmable thermostats
• Energy-efficient appliances and equipment
• Improved insulation and weatherization
• Solar panel installations
• Energy management systems (EMS)
• Employee training on energy-saving behaviors

These measures reduce energy costs and enhance the overall operational efficiency of your franchise, potentially leading to improved customer experience and brand reputation.

How to conduct an energy audit

Conducting a comprehensive energy audit is an essential step in identifying areas for improvement and prioritizing energy efficiency measures. If you’ve partnered with an energy procurement specialist, they can handle this part of the process for you. Here’s how they do it.

• Gather at least 12 months’ worth of historical energy data and compile consumption data for each location.
• Analyze energy usage patterns to identify trends, anomalies, and differences between locations to uncover potential issues or opportunities.
• Perform on-site inspections to assess the condition of equipment, building envelope, and energy systems.
• Use diagnostic tools such as infrared cameras, power meters, and blower door tests to identify areas more prone to energy loss.
• Observe how employees consume energy and note any inefficient behaviors or processes.
• Compare your energy usage to similar businesses in your industry to gauge performance.
• Compile a list of potential energy-saving measures, ranked by potential impact and cost-effectiveness.

Lastly, an energy procurement specialist will develop an action plan that includes the most promising energy efficiency measures across all franchise locations. After implementation, they will continue to track energy usage to validate the effectiveness of the measures and adjust as needed.

Strategy 5: Considering Renewable Energy Sources

Incorporating renewable energy sources into the energy mix is a powerful strategy for multi-location franchises to reduce their energy expenses and environmental impact. Renewable energy offers numerous benefits, including long-term cost savings, energy price stability, and enhanced brand reputation.

Multi-location franchises can demonstrate their commitment to sustainability by adopting clean energy solutions. Doing so may attract customers who prioritize spending money with environmentally conscious businesses.

Among the benefits of integrating renewable energy sources:

• Reduced energy costs over time
• Protection against volatile fossil fuel prices
• Potential for energy independence and resilience
• Compliance with emerging regulations and sustainability goals
• Potential new revenue streams through excess energy sales

Options for renewable energy procurement

Multi-location franchises have several options for incorporating renewable energy into their operations. On-site solar installations are a popular choice for their versatility. They’re suitable for locations with ample sun exposure and available space. Franchise owners can install solar panels on rooftops or parking structures. They provide direct energy generation and the potential for net metering.

Another popular option is green tariffs – utility programs that allow businesses to buy renewable energy through the grid. Often available in regulated electricity markets, it provides access to clean energy without on-site installations.

Energy procurement strategies to power your franchise’s future

Multi-location franchises face unique challenges in managing energy expenses. However, with the right strategies, these challenges can be transformed into significant opportunities for cost savings, operational efficiency, and sustainability. 

Our five key energy procurement strategies are interconnected approaches that create a holistic energy management framework. Multi-location franchises can reduce operational costs, minimize energy price volatility, and create competitive advantages by proactively addressing energy procurement and efficiency.

Don’t let energy expenses continue to eat into your profits. Take the next step to transform your franchise’s energy management strategy. Our team of energy procurement specialists is ready to help.