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How Pret A Manger optimised energy use

23 April 2014

Food retailer Pret-A-Manger was keen to optimise its energy use and sustainability credentials. In 2010 it turned to Sustainable Advantage for help.

Pret-A-Manger opened its first shop in London in 1986. The enterprise was founded by college friends, Sinclair Beecham and Julian Metcalfe, and what they  lacked in business experience they made up for in clarity of vision: they wanted to make 'proper' sandwiches that avoided the obscure chemicals, additives and preservatives common to much of the 'prepared' and 'fast' food on the market. The public has responded enthusiastically ever since, turning Pret into one of the UK’s most prominent food chains.

Because Pret is privately owned, the founders don't face the same pressure to grow that a public company does. There are about 335 Pret shops worldwide; most are in the UK and between them we turn over about £450 million a year.

Any food chain this size is certain to be a major energy user – something of which Pret is acutely aware. That’s why it has been working with Sustainable Advantage (SA) – an energy and waste consultancy specialising in multi-site property portfolios. SA is headed up by MD James Stander who has ambitions of turning SA into the UK's leading specialist energy and waste procurement and management support organisation.

Pret is adamant its commitment to sustainability is real – it claims to have no interest in ‘green washing’. The company has set out a tailored sustainability strategy to 2015 which emphasises five key aspects: resources, waste, sustainable sourcing, natural food and contribution to society.

Specifically, Pret aims to:
* make efficiencies in energy and water usage, minimise waste throughout the supply chain, optimise food production and achieve zero waste to landfill from shops;
* use the highest practical levels of animal welfare and environmental stewardship;
* stick to its mission statement and be synonymous with providing a balanced, nutritious range of food;
* pioneer charitable activities across all markets through the Pret Foundation Trust.
Jon Temple, Pret’s finance director, says re-evaluating the chain's sustainability strategy meant looking at resources such as electricity and water and what could be done to reduce use and emissions. Temple says he has a twin-hatted approach that includes looking at costs which, given that Pret’s electricity spend is now about £5m, are definitely a priority.

''If you can marry up the 'positive' signal of sustainability with cost savings for the business, then all is well and good. I discussed this with the chief operating officer, saying I thought our electricity costs were getting to such a point we needed external help to create a strategy for cost reduction and usage, including implementation and management from start to finish given the size of the task at hand”.

So Temple arranged meetings with several potential advisers including SA, discussing how they would approach the project and what their credentials were in this field. This resulted in Pret engaging SA on energy procurement as well as a pilot behavioural change project. ''They had worked with many high profile multi-site clients in energy procurement and importantly on consumption reduction projects in a holistic way. They seemed to have a comprehensive mix of skills, so we decided to run a three-month behavioural change pilot with 10 shops. The relationship has built from there,” says Temple. ''We worked well with them, the pilot was good and we got to know each other. I think Pret always works better with specialist companies that are relationship based.

“We tackled our energy costs in two ways – by running a rigorous energy re-procurement programme, then looking at how we could reduce consumption. SA started about eight months prior to our contract expiry, leaving enough time to ensure we picked the timing just right. They went to several providers and looked at it on a site-by-site and holistic level. Npower, our incumbent provider, wanted to retain us as a client and after some tough negotiation they succeeded. Pret's group energy contract is sourced from 'green energy',” says Temple.

''Consumption reduction is on the other hand an ongoing project and by its nature more complex in terms of knowing what to do with several capex equipment types and suppliers pushing their products on you. We wanted to ensure we spent our money wisely and one of the best decisions we made was allowing SA to install sub-metering in 13 pilot shops so we could understand where we were being inefficient and whether it was a behavioural change or capex fix.

‘’Once we agreed it was the latter,  we could trial several different products from a number of different suppliers and in a range of different shops and create a bespoke capex program targeting the quickest wins first. Adam Turner, our sustainability projects coordinator, is now running with this project which will see us investing more than £250k in the next few months.''

''SA is the expert,'' says Turner. ''They’re familiar with the available technology and they know what works in our shops. They made suggestions about sustainable solutions and we decided that without their expertise and guidance we'd be conducting a blind trial.''
The key for Pret in order to achieve its objectives, says Turner, is quality, regular management information from which it can make informed decisions quickly. ‘’SA validates our invoices monthly and, using smart meter data, also prepare consumption reports per store with league tables. SA run several reports for us such as our ‘out-of-hours’ report that allows us to track energy usage when we know usage should be low. We feed these results back to our teams.

‘’We have a group contract with Npower for most of our shops and we have other shops managed by landlords - for instance, Network Rail manages our shop in Victoria Station. We are starting to look at how we engage with landlords in our managed estate and whether the allocation of charges is fair to both parties.”

Turner works in a team of six, three of whom are employed permanently by the Pret Foundation Trust, the charitable wing of Pret. ''We work together across the five strands of the strategy - we're a close-knit team. My daily duties are focused primarily on the energy and resources side of things, but I also deal with complex ethical matters that aren’t associated with energy. My mission is to expose myself to as much of the business as possible because I think sustainability is a broad church and isn't just bolted onto another department but is instead fundamental to every aspect of the business.''

Turner says he finds himself in meetings with SA one day, then talking about coffee procurement the next. ''Like any mid- to large-sized organisation, communication is key. Because of the nature of sustainability, the challenge is to join people up - people from different departments speak different languages. It's just a reality of working in a successful company.''

When asked how much pressure there is on him to reduce energy, Jon Temple laughs. ''I plead the fifth on that one! There is a requirement to grow the business organically at Pret. Finding savings from our non-food costs is a real challenge. There are 40 different lines of costs, of which electricity is a major one. With the spend what it is, pricing is key but it was also about finding the right service to go with it – having smart meters fitted across the estate, accurate billing, dealing with problem billing sites where for instance billing data is missing etc. We could go with the cheapest supplier of a service but if it doesn’t support the shops, how does that help? So something that looks like a saving at first may not in actual fact be one.''

However, he adds that there is no pressure on him or the sustainability agenda from a cost point-of- view”. "Like all departments there are budgets, so the sustainability department sets out the saving it wants to make but it's very embedded in the other departments. The money is definitely there if the right things are being done. It's very much part of what Pret does; we're reasonably successful so where we have had savings we've chosen to invest them elsewhere in the business.''

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James Stander, MD of SA, says Pret’s mission-critical and highly embedded use of energy required ‘a thorough and integrated approach’, and that the scope of work involved in understanding, optimising and maintaining energy use within large companies often stops companies from tackling energy management in a meaningful way.

''The way the energy market operates presents many challenges for clients, the largest being that clients need to engage with a range of suppliers to reduce energy costs,'' says Stander. ''These include a consultancy organisation to assess what has been done, what the client's competitors are doing, what their customers want, what budgets are available and the actions that need to be taken.''

Often, an energy procurement company is appointed to procure the energy. However, the biggest savings come from buying at the right time – a key point often neglected in favour of arbitrary purchasing, perhaps when budgets need to be set or when contracts are about to expire. A company is needed to verify supplier invoices are correct, resolve account queries and report on cost, consumption and emissions to all levels of the business and importantly, to build growing understanding of energy use while proving and maintaining savings.

''Furthermore,'' Stander points out, ''often a different company is needed to take the results and do something with them such as conducting site visits for energy surveys. That often requires capex purchases which, because they're in various areas, means engaging with several more companies in various areas such as lighting, voltage optimisation, building controls, etc. This could mean 20 companies may need to be approached to access 10 capex areas.''

As if all that wasn't enough, says Stander, staff need to be trained – potentially requiring the engagement of yet another company, and legislative compliance can require the involvement of consultants to assist with an ever-expanding list of emissions related schemes including CRC, CCAs and EUETS. ''In summary, more than 30 companies could need to be called on and engaged with during a holistic approach to energy management to achieve their goal. In addition, several internal departments need to be engaged constructively - finance, HR, operations, external FM, shop-floor workers and the board itself to get their buy in.

’’Hence I feel engaging with SA made sense for Pret as it does for many of our clients: we take on the entire project, managing internal and external teams with our own staff delivering many specialist areas themselves. We’re not aligned to energy providers or capex suppliers and are hence unbiased, always ensuring we put the client’s needs first''.

Stander says: ‘’If I had to single out one key element in this process that was worth its weight in gold (or coffee beans) it was the fact we fitted sub-metering to 13 of the 250 stores at the outset and that every item of equipment in those shops that used energy had real-time information on the usage.

"We used the sub-metering to assess how each shop used energy across a 24-hour period. Then in making recommendations we saw what specific capex replacement items best suited each type of shop (large, small, differing trading hours, etc.) and what supplier had the best results. In the end we knew what piece of kit had the best results in each shop type and which supplier's equipment was the best performer within that category.

"For SA as an energy support organisation, Pret is a fantastic client to be associated with given its rigorous approach to energy reduction, says Stander. ‘’We've worked with them from setting the strategy to buying their energy, doing monthly bill validation, budgeting and reporting to helping them reduce the energy they use in current and new stores including the sustainable development of new stores. The results have so far been fantastic and we continue to work together to raise the bar even further.”



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