Energy bills threaten profitability of Australia’s QSR sector

QSRs face tighter cash flow with another energy price hike looming in July.

Australia’s quick service restaurant (QSR) sector is bracing for an energy tariff hike of up to 5% this July, further straining already tight margins. Power bills for some operators have doubled in recent years, making profitability increasingly difficult.

“It’s putting a lot of downward pressure on profitability, and that’s even if the revenue of the business is growing,” Austin Huntsdale, Chief Product Officer at Zembl.

Huntsdale noted that QSRs typically operate on thin margins and fast cash conversion cycles. “As energy bills increase, cash flow becomes tighter. Even small increases in cost can really affect the bottom line,” he said. Given the sector’s high energy demands from cooking, refrigeration, and lighting, utility costs remain a significant burden. “A QSR can use up to 10 times as much energy as a standard commercial office building.”

Despite the importance, energy management often remains a blind spot. “Energy management often takes a backseat to more immediate operational concerns,” Huntsdale explained. “A big blind spot is not really taking the time to understand what’s actually driving the energy bills.”

He advised QSRs to conduct energy audits, which can pinpoint inefficient equipment and processes. “They can actually generate reports and insights, make specific recommendations that are going to help a business to reduce energy costs.”

Maintenance is also critical. “If there are problems with equipment, and you let that go, they’ll not only end up consuming more power, but that can escalate to bigger breakdowns, unexpected downtime, higher repair costs,” he warned.

Staff behaviour also plays a role. Simple actions like switching off lights or powering down unused equipment can lead to cumulative savings. “They’re small changes, but that can really add up over the course of a year.”