Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-212-3423.
Chris Toman’s plan to go green could have put him in the red.
The owner of a local pizza franchise plans to apply for LEED certification for his 2,600-square-foot restaurant space on the back burner because it was going to cost too much.
Toman said he would have to pay between $30,000 and $40,000 to become certified by the U.S. Green Building Council under its Leadership in Energy and Environmental Design program, which awards points to structures that are energy efficient and otherwise good for the environment.
$40,000 for a small restaurant to get green certified is proportionally a huge expense., plus the cost of the alternative materials such as insulation made of old jeans and coke bottles for a countertop. Would that $40,000 be more profitably spent on advertising?
While going green can sometimes attract additional customers in certain markets, the increase in price compared to the market will divert others to your competitors.
Toman is opening a Pizza Fusion franchise, which requires all of its restaurants to be built to LEED standards, as part of its self-described mission to “Save the Earth one Pizza at a Time.”
Not only are the buildings green, the chain delivers pizzas in hybrid vehicles.
The cost of going green for Pizza Fusions in other markets is less than half of what Toman was told he’d have to pay here.
Much of the cost goes to consulting companies that develop energy-efficiency plans for buildings seeking certification. These firms also make sure the buildings ultimately perform the way they were designed and file reams of paperwork required on all projects regardless of their size.
“It seems like they’re overcharging,” he said. “I’m trying to do the right thing, but someone’s taking advantage of it and charging high rates.”
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I am a Pizza Fusion franchisee. The cost of the materials- recycled blue jean insulation, coke bottle countertops etc. are no more expensive than their non-environmentally friendly counterparts. Additionally, the concept tries to use locally recycled and reclaimed furniture and construction materials. For example, the store in Seattle will use the wood floor from a demolished school, and pews from a local church. The San Diego store has table tops made from the wood of an old barn. All of these furnitures and fixtures cost less than buying “new”, add local character to the restaurant, and are better for the environment.
The Pizza Fusion restaurants also have utility bills 40-50% lower than similar footprint concepts. Highly efficient appliances, a heat exchanger to use the heat from the oven to heat hot water, solar tubes to enhance the natural light in the restaurant, compact flourescent lighting are just a few ways this is accomplished. This represents a significant amount of cash savings over the life of the restaurant. Most restaurants can take small steps today to save themselves money and also make a difference for the planet.
The LEED certification expense quoted in this article is unfortunate. A small business trying to do the right thing should be rewarded for these efforts and not penalized. The fees being charged by architects and certifiers are way out of whack and I can imagine this service will fall in line cost wise as the supply of certified professionals increases.
As for the “increase in price diverting others to your competitors”, I would say that our customer base expects to pay a little more for high quality. We serve an all organic and natural menu of food, wine and beer, and we have menu options for folks with gluten intolerance as well as vegan and vegetarian options. Our customers are not looking at going down the street to one of the big chains to save a few bucks by buying an average product made from assembly line ingredients.
James wrote on August 31, 2008 @ 4:47 pm:
Hate to break your bubble on some things, but you are exaggerating the cost savings:
* Blue jean insulation costs 50% more
Buying local used furniture or scraps from demolished projects will save some money, of course.
Organic and healthy-only restaurants haven’t been profitable in general. For example, O’Naturals, which is the Stonyfield founder’s restaurant venture, has been a money-loser. Other healthy places like wraps and salad QSRs mostly aren’t doing that well.