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IoT Delivers ROI for Foodservice Operators: Here’s How
Food Services

IoT Delivers ROI for Foodservice Operators: Here’s How

Discover how IoT solutions deliver ROI for foodservice operators via cost-cutting opportunities from the kitchen to the bathroom for enhanced efficiency and savings.

The Internet of Things (IoT) is seeing rapid adoption in the foodservice industry. Historically, the technology focus has been on front-of-house operations. However, operators (and their IT teams) are seeing the potential of IoT for back-of-house operations, which comes with tangible ROI from early adopters. As the industry returns to "normal" for the first time in nearly four years, it does so with new and ongoing challenges, including inflation, rising food and labor costs, and staffing shortages. Smart operators are finding the opportunity to cut costs in areas where operators have not seemingly turned before. Let's examine how.

Who's Monitoring the Refrigerators and Freezers?

The value and ROI derived from temperature monitoring of refrigerators and freezers is exponential due to the multiple areas it impacts. It can help control labor costs, manage limited staff, automate temperature monitoring and logging, reduce energy costs, and prevent food loss and spoilage amid rising food costs.

Efficiency in the foodservice industry starts with intelligent resource management. Automating temperature logging processes through IoT streamlines safety and regulatory compliance and liberates valuable employee time for customer-focused activities. On average, manual temperature logging consumes 30 minutes of an employee's day, costing $9.76 per day for an employee making the average wage of $19.51/hour. While that may seem nominal at best, calculating that cost across 1,000 stores equates to nearly $10,000 a day in manual efforts. Multiply that across a year, and the enterprise is looking at over $3.5M in manual labor costs on routine tasks such as logging temperatures. Further, even in the unlikely chance employees are only making the current federal wage minimum of $7.25/hour, that would equate to $1.3M/year for a restaurant chain with 1,000 locations.

Additionally, increased food costs are driving higher expenses and overhead. Therefore, employees must carefully monitor temperatures in refrigeration and freezer units to prevent food spoilage and maintain quality. Since restaurant operators keep an average food inventory valued at $10,000 in their refrigerators, and equipment failures can occur once every three years, preventing spoilage or loss becomes even more vital to restaurant operations. Employing IoT solutions could save up to $3.3M anually on waste costs alone if operating 1,000 stores. This doesn't factor in the brand and reputational cost from a foodborne illness if spoiled food is accidentally served to guests, which can cost operators an additional $4,000+per outbreak.

Potential Cost Savings with IoT-based Temperature Monitoring

Labor Waste Foordborne Illness Total
Daily Cost Savings 30 min per store per day x $7.25 = $3.63 per day Equipment failure once every three years and $10,000 avg food inventory on hand = $9.26 per day Per Johns Hopkins study, $4,000 per outbreak or $11.11 per day $24.00 per day/store
Annual Cost Savings $1.3M annually $3.3M annually $4M annually $8.6M annually

*Annual figures based on 360 days and 1,000 store locations

Cut the Power, Literally, from High-Energy Equipment

Fast food operators use an average of 81 kilowatt-hours (kWh) of electricity and 174,000 Btu of natural gas per square foot annually. Integrating IoT for power and energy management can help cut energy usage by 20%, translating to thousands of dollars (in some cases millions) in annual savings. For example, kitchen appliances such as refrigerators, freezers, ice machines, and ovens consume vast amounts of energy. Using IoT sensors like CT clamps to monitor power consumption at the equipment level enables food service operators to identify inefficiencies and implement targeted energy-saving measures, such as scheduling equipment usage more efficiently or investing in energy-efficient appliances.  Smart plugs, on the other hand, allow operators to remotely monitor and control power to connected devices, enabling non-essential equipment to be automatically turned off during non-operational hours or when not in use. By optimizing power consumption, operators not only reduce operational costs but also contribute to a more sustainable and eco-friendly operation.

Moreover, IoT can help maintain aging appliances for peak performance of kitchen equipment. IoT devices can be used to proactively monitor the utilization of equipment over its lifetime and detect abnormal energy use to predict when it may need service or repairs before issues arise.

Potential Energy Savings with IoT-based Power & Energy Monitoring

Cost of Electricity Energy Reduction Total
Cost for electric annually is 2.90/sq ft per store. The average size of each store is 4,800 sq ft.

$13,920/store annually
20% savings in electric by leveraging IoT

$2,658/store annually
$2.7M in annual savings

*Annual figures based on average foodservice location of 4,800 sq ft and 1,000 store locations

Additional Savings to Consider

Other areas of the business with cost-savings potential for foodservice operators are bathrooms. According to one study, more than a third of customers state that a clean, well-stocked restroom could positively impact revenue for restaurants. Employing inefficient processes for maintaining sanitary and supplied restrooms is costly and has more considerable consequences.

With IoT-enabled restroom solutions (i.e. connected paper towel, toilet paper, and soap dispenses), operators have the potential to recoup 15% in waste. By notifying staff in real-time when dispensers need refilling, it mitigates the risk of staff replacing units prematurely during routine cleanings, which leads to waste (and sunk costs) from partially used rolls/soap refills being thrown away. By enabling restaurants to transition from scheduled to needs-based restocking processes, these solutions also save employee’s time, enabling them to dedicate more time to serve customers. Like temperature and power monitoring, while the savings may seem nominal at first, when multiplied across thousands of stores, it adds up quickly.

It’s clear that IoT solutions can deliver significant cost savings opportunities. But how do foodservice operators get started? What are the must-have requirements to ensure scalability and success? Stay tuned for part two where we’ll dive deep to answer those questions and more.

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