Calculating the Cost of Ownership of Commercial Refrigeration

Commercial refrigeration is an essential part of any foodservice endeavor, and having the right pieces for your needs is important. Once you know what kind of refrigeration you need, there are often still several choices to make, with options and accessories to consider, as well. While it's tempting to simply select the unit with the lowest out-of-pocket price, it is wise to consider the true cost of ownership in addition to that initial price.

What is Cost of Ownership?

When making any large purchase, the buyer must consider not only the price on the sticker, but also what the unit will cost in maintenance, repairs, and everyday usage over the course of its life. These factors, called indirect costs, may not come out of your pocket right away, but they do create an ongoing cost associated with the equipment. In many cases, units that are cheaper initially will have higher indirect costs, meaning that while you paid less to begin with, that low-cost refrigerator actually may cost you more over its lifetime. Calculating a unit's cost of ownership isn't an exact science, but estimating what a unit will cost you over time can help you make a wise purchasing decision.

Direct costs involved with purchasing a commercial refrigerator are simple to figure out: the cost of the unit and any associated tax or delivery charges are direct costs. Below are some of the indirect costs you will need to consider for each refrigeration option you have to choose from.

Installation

The first indirect cost you may encounter is installation. For most commercial refrigeration, this cost is minimal; an hour or two of labor to unpack, assemble, and level the unit, and it's ready to go. However, when refrigeration is installed by someone in-house, there's always the possibility of user error resulting in improper leveling, leading to leaks or a frozen evaporator. These malfunctions are usually easily resolved, but can mean an unplanned service call that is rarely covered by warranty.

Some commercial refrigeration models, such as walk-ins and units using remote refrigeration, require professional installation. While this is a higher installation cost that must be taken into account, the lessened strain on your building's HVAC system by removing that condenser heat to outside is a factor that must be taken into account. The air conditioning running less can save you money in utilities, and if you live in a relatively moderate climate, the remote unit is often more efficient than a self-contained refrigerator that has to operate in a hot kitchen.

Energy Usage

The amount of money you have to pay over time for the power your refrigeration uses is another indirect cost that is very important to consider. How important this cost is to your overall cost of ownership will depend on how much power costs where your business is located. If you're unsure of how to break down your power costs, you may refer to the Electric Power Monthly report from the U.S. Energy Information Administration for what to expect in your state.1

Virtually everything about how a refrigerator is built can affect its energy efficiency. Below are some of the factors to keep in mind as you compare the energy efficiency of different models.

  • Your refrigerator's insulation determines how well it prevents heat from penetrating the cooler's walls. Each unit has an R-value that can tell you how well it is insulated.
  • The ambient temperature of the area where the refrigeration will be operating will have an effect on the energy efficiency of your unit. The hotter the surrounding air is, the harder the compressor must work to keep the interior of the unit at the proper temperature. This is especially an issue for outdoor walk-in coolers or indoor coolers with remote refrigeration.
  • Pay attention to the type of motors used in each type of refrigeration. While traditional brushed motors can be made to be energy efficient, brushless motors, also called electronically commutated motors, are generally far more efficient due to their ability to produce more torque per watt. These are also often combined with microprocessor controls to further ensure efficiency, which is not possible with a brushed motor.
  • The type of door on a refrigerator can impact its efficiency, but it's not quite as black-and-white as some of the other factors. Glass doors naturally provide less insulation than solid doors, but they also allow you to see inside the refrigerator without opening the door, which helps preserve the interior temperature. If you choose a glass-door unit, find one with double- or triple-paned and gas-filled doors for maximum insulation.
  • An easy way to know that you're getting an energy efficient piece of commercial refrigeration is to look for the ENERGY STAR designation. ENERGY STAR is a certification given only to units that meet the program's stringent guidelines restricting power consumption. In addition to saving you money on utilities over time, many utility companies also offer rebates or tax credits when you purchase ENERGY STAR equipment. Check the program's rebate finder2 to see if your state or local utilities offer any rebates that can help reduce your overall cost of ownership.

Regular Maintenance

Indirect costs don't always appear as line items in your monthly budget. Sometimes they take the form of money you put into payroll, paying for time an employee spends maintaining the piece of equipment. When it comes to payroll, time is literally money, so it's important to know how much maintenance will be needed on each unit. Most commercial refrigerators require the same basic maintenance tasks, but servicing some models is quicker and easier, which means they cost less in labor over time.

One thing that needs to be done daily – and sometimes multiple times a day – is checking the temperature and ensuring the food is being held at safe temperatures. This is an essential element of food safety and documenting this temperature is often part of a HACCP plan. Many economy refrigeration models have the thermostats on the interiors of the cabinets, meaning the doors have to be opened to read the temperature. That takes more time, allows warm air into the cabinet, and makes the compressor work harder to lower the temperature once more. However, it is becoming more common to see freezers and refrigerators with the temperature displayed on a dial or digital screen on the exterior of the unit. Either is an improvement over the interior location, but the digital option makes it especially easy to read the temperature at a glance.

Cleaning is important to do on a regular basis, so models that make that simple can save a lot of time and money. Some refrigerators have features that make cleaning simple, such as coved corners, shelving that is easier to remove, and snap-in gaskets. Condensing and evaporator coils and fan blades should also be cleaned regularly, so those being easy to access can save time and ensure this actually gets done, which will help keep the unit efficient.

Another important part of regular maintenance is checking parts for wear, especially parts that are commonly replaced. These parts being easy to remove and replace means you're more likely to maintain them as needed. The door gaskets are one of the most common parts that need to be checked for wear; if they need to be replaced, snap-in or magnetic gaskets are beneficial. Shelves and hinges also sometimes need to be replaced, but investing more up front in a unit with durable shelves and hinges can save you money on these replacements in the long run.

Service

Service calls are an inevitable part of any piece of equipment's life, so knowing what you're likely to pay for these calls can help you estimate your unit's cost of ownership. This is where the overall durability of your unit comes into play; the more durable and reliable a piece of equipment is, the less likely it is to require extensive servicing. A service call's cost is determined by several factors, including your location and the repair work needed, but a big part of it is also the time the technician spends en route and on-site. Because of this, refrigeration with features that can reduce that time can save you a lot of money. Some models have self-diagnostic features that can be helpful in this regard and ease of access to serviceable parts is another major factor.

The warranty that comes with the unit is a major consideration when you're looking at potential service costs. Pay close attention to what each warranty covers, as some manufacturers cover different timespans for parts, labor, and compressor. While units with good warranties may sometimes cost more, the amount saved on service over the years can add up quickly. Additionally, the warrantied pieces are often built more durably; otherwise the company could not afford to warranty them. This durability will benefit you even if you never have to make a warranty claim – after all, even if the warranty covers repairs, you still run the risk of losing all the food in the cooler when it goes down.

The last thing to keep in mind when considering a commercial refrigerator or freezer is its lifespan. After all, a refrigerator that costs half as much as another model isn't really a deal if you have to replace it twice as often. Unfortunately, this is a difficult variable to pin down. There's no way to know how other operators are treating their equipment, so it can be hard to trust a few reviews complaining about a short-lived unit. However, if you see a trend of dissatisfied customers leaving poor reviews about the longevity of the unit they bought, you may want to think twice about making that purchase.

Calculating Cost of Ownership

Figuring out cost of ownership requires a lot of research and often some educated guessing. It can be difficult to figure out where to start, even with all the information above, but the Food Service Technology Center has a life-cycle cost calculator to make it easier. While this calculator is geared toward solid-door reach-in refrigerators, it can be used to calculate other commercial refrigeration as well.

While using the calculator, keep in mind that it doesn't take some factors into account, such as ease of maintenance or available warranty. However, it gives you a great place to start comparing models that includes energy consumption and takes your location and energy cost into account.

  1. Electric Power Monthly. U.S. Energy Information Administration. Accessed August 2017.
  2. Commercial Refrigerators & Freezers. ENERGY STAR. August 2017.