Business energy for restaurants: key facts
- Most commercial kitchens are gas-heavy. Ranges, ovens, fryers, chargrills and water heating are often gas, so compare your gas contract as carefully as your electricity one.
- Refrigeration never stops. Walk-in cold rooms, reach-in fridges and freezers run 24 hours a day, so a restaurant uses electricity even on the days it is closed.
- Extraction fans usually run for the whole service, often from first prep to final clean-down, which makes them one of the steadiest electricity loads in the building.
- There is no price cap on business energy. Ofgem's cap covers households only; a restaurant's prices are whatever its contract says.
- Taking over a restaurant without agreeing a contract puts you on a deemed contract, and letting a contract lapse moves you to out-of-contract rates. Both are usually much higher than contract prices.
- Most restaurants pay 20% VAT and the Climate Change Levy. The 5% VAT rate only applies below 33 kWh of electricity or 145 kWh of gas a day.
- Broker fees must be shown in the contract for business energy contracts signed since 1 October 2024, and microbusinesses get a 12-month back-billing limit.
Why is gas such a big part of a restaurant's energy bill?
Because most of the heat in a commercial kitchen comes from gas. Ranges, ovens, fryers, chargrills, bratt pans and water heaters are commonly gas-fired, so a restaurant can use a large volume of gas alongside its electricity. Getting a good gas contract is half of the job, not an afterthought.
Many small businesses think of energy as an electricity question. For a restaurant, that leaves out the fuel doing most of the cooking. A typical split in a gas-fired kitchen looks something like this:
| Usually gas | Usually electricity |
|---|---|
| Six-burner ranges and solid tops | Extraction and supply-air fans |
| Ovens and combination ovens (some models) | Walk-in cold rooms, fridges, freezers and blast chillers |
| Fryers, chargrills and griddles | Dishwashers and pot washers (heating elements as well as pumps) |
| Water heaters and boilers for hot water and space heating | Lighting, tills, EPOS, booking screens and music |
| Bratt pans and stockpot burners | Hot cupboards, bain-maries, microwaves, coffee machines and induction hobs |
Every kitchen is different, but it helps to know roughly how your use splits between the two fuels, because gas and electricity are priced separately and often end on different dates. Lining up the end dates makes renewals easier, but don't break a contract early to do it without checking the exit fee.
How does a restaurant use energy through the day?
Restaurant energy use follows the service. Refrigeration runs all the time, prep brings ovens and burners on in the late morning, lunch and dinner services create two peaks with extraction running throughout, and the dishwasher keeps going after the last table has left.
| Time of day | What's usually running |
|---|---|
| Overnight | Cold rooms, fridges, freezers, ice machines and any equipment left on standby. This is your restaurant's baseline. |
| Morning prep | Ovens and burners for stocks and sauces, extraction, lights. |
| Lunch service | Most cooking kit at once, extraction at full speed, hot cupboards, dining room heating or cooling. |
| Afternoon gap | Prep for the evening. In some kitchens almost everything stays on; in others ranges and fryers go off until the evening switch-on. |
| Dinner service | The main peak: full kitchen, extraction, dining room lighting and heating, bar fridges. |
| Close and clean-down | Dishwasher and pot wash running hard, extraction during cleaning, then switch-off. |
If your site has a half-hourly or smart meter, the data shows when those peaks happen and how high your overnight baseline is. A high baseline can point to cooling equipment working too hard or kit left on. Larger sites on half-hourly supplies may also pay a capacity (kVA) charge; if your kitchen has changed, a broker can check the agreed capacity still fits.
How much energy does kitchen extraction use?
Extraction and supply-air fans often run from the start of prep to the end of the clean-down, so although each fan isn't the biggest load, the long running hours make extraction a significant part of a restaurant's electricity use. It also pulls heated or cooled air out of the building.
Ventilation removes heat, steam, grease and fumes so the kitchen is safe to work in, so it can't simply be switched off. What you can look at is how it is run and maintained:
- Running hours. Does the extraction come on at the right time and go off once cooking and cleaning are finished, or does it run long after everyone has gone?
- Speed control. Some systems have variable-speed fans; older ones may run at one speed. Ask your ventilation engineer what yours can do.
- Filters. Clogged grease filters make fans work harder, and cleaning them is also a fire-safety matter.
- Make-up air. If replacement air comes from a heated dining room, extraction raises your heating bill too.
Why does a restaurant use electricity when it's closed?
Because refrigeration runs 24 hours a day, seven days a week. Walk-in cold rooms, reach-in fridges, under-counter units, freezers and ice machines keep working whether the restaurant is open or not, which makes them a constant load on the electricity bill.
Because refrigeration never takes a break, its condition affects the bill all year. Checks worth building into the kitchen routine:
- Door seals. Split or flattened gaskets on fridges and cold room doors let cold air out and warm air in. A simple test is closing the door on a sheet of paper: if it slides out easily, the seal needs attention.
- Condensers. Condenser coils clogged with kitchen dust and grease make the compressor work harder. Keep them clean and leave space around units for air to move.
- Placement. A fridge next to a fryer works against the heat; keep refrigeration away from cooking lines where you can.
- Cold room doors. Doors propped open during deliveries and missing strip curtains add load.
- Spare units. An old freezer kept "just in case" still runs all night. If it isn't needed, switch it off.
Food safety comes first: never switch off or adjust refrigeration in a way that puts stored food outside safe temperatures.
What is a kitchen switch-on schedule and does it help?
A switch-on schedule is a simple written plan of when each piece of kitchen equipment goes on and off, based on when it's actually needed. It replaces the habit of turning everything on at the start of the shift and leaving it on until close.
In many kitchens the first person in turns on every burner, fryer and oven whether the menu needs them yet or not. To build a schedule:
- List your equipment and note which fuel each item uses.
- Note how long each item takes to heat up. A fryer or a combination oven may need a set time; a gas burner needs almost none.
- Match switch-on times to the prep list and service times, so equipment comes on shortly before it is needed.
- Plan the afternoon gap. Decide what can go off or down between lunch and dinner and what has to stay on.
- Set a clear close-down routine so the last person out knows what goes off and what (such as refrigeration) must stay on.
- Put it on the wall and review it when the menu or hours change.
What difference this makes depends on your kitchen and team, so treat it as good practice, not a guaranteed saving. Smart meter data lets you compare days before and after.
What happens to the energy when you take over a restaurant?
The gas and electricity stay connected, but until you agree contracts you will be on the suppliers' deemed rates, which are usually much higher than contract prices. Read the meters on day one and agree contracts as soon as you can.
New operators are busy with staff, menu and fit-out, and energy is easy to forget because the lights stay on. A first-week checklist:
- Find every meter. Restaurants can have more than one electricity meter and a separate gas meter, sometimes in a basement, yard or shared cupboard. The MPAN (electricity) and MPRN (gas) numbers identify each supply.
- Read and photograph each meter on the day you take over, with the date visible, so your bills start from your own readings.
- Find out who supplies the site from the outgoing operator, the landlord or the agent, and tell each supplier you have moved in.
- Get quotes for both fuels. If you plan to change the kitchen, for example swapping gas equipment for electric, tell the broker so the quotes reflect what you'll actually use.
- Agree contracts and diary the end dates.
If you are already on a deemed or out-of-contract rate, you can normally agree a new contract straight away, often without an exit fee. Check with your supplier.
How should a restaurant choose and renew its energy contracts?
Most restaurants choose fixed-price contracts of one to five years for gas and electricity. The most important thing is to start looking before your renewal window rather than after the end date, so you never drift onto out-of-contract rates.
Points that come up often for restaurants:
- Fixed or flexible. Fixed contracts set your rates for the term, which helps when costing a menu. Flexible contracts move with the market and suit larger groups.
- Contract length and your lease. A five-year energy contract on a three-year lease could leave you with exit charges if you move. Ask whether the contract can transfer to the next occupier, and match the term to your plans.
- Renewal windows. Many suppliers let you agree a new contract months before the current one ends. Find your end date and any notice period on the contract or a recent bill.
Restaurant groups and multi-site contracts
If you run several restaurants, a broker can look at a multi-site contract with one supplier, aligned end dates and consolidated billing. Each site still has its own meters and charges, so compare per-site prices as well as the overall offer.
Should a restaurant switch to an induction or all-electric kitchen?
Some restaurants are moving to induction hobs and all-electric kitchens for reasons such as a cooler working environment, easier cleaning, sites without a gas supply or wider sustainability plans. Whether it suits you depends on your menu, your building's electrical capacity and the cost of the change.
Things to think through before you commit:
- Electrical capacity. Induction and electric ovens add a lot of load; your supply may need upgrading.
- Your contracts. Usage shifts from gas to electricity, so tell your broker before you renew.
- The menu and the chefs. Some styles, such as wok or chargrill cooking, are closely tied to gas or solid fuel.
- Extraction and equipment cost. Ask your ventilation engineer whether the system would need altering, and cost new equipment against the life of your lease.
How running costs compare depends on your contract prices, equipment and cooking, so get quotes for both fuels based on the kitchen you plan to run.
What's on a restaurant energy bill, and what protections apply?
Each gas and electricity bill is made up of a unit rate, a daily standing charge, VAT (usually 20%) and the Climate Change Levy, plus any capacity charge on half-hourly sites. Smaller restaurants that count as microbusinesses get extra protections, including a 12-month back-billing limit.
| Item | What it means for a restaurant |
|---|---|
| Unit rate | Price per kWh for gas or electricity. With a busy kitchen, this is where most of the cost sits. |
| Standing charge | A fixed daily charge for each meter, paid on days you're closed too. |
| VAT | 20% for most restaurants. The 5% rate applies only below 33 kWh of electricity or 145 kWh of gas a day, which a working commercial kitchen rarely is. |
| Climate Change Levy | A government tax on business energy; supplies under the same de minimis limits are excluded. |
| Broker fee | If you use a broker, their commission is often built into the rates. For contracts signed since 1 October 2024, it must be shown in the contract's principal terms. |
A restaurant is a microbusiness for energy purposes if it has fewer than 10 employees (or full-time equivalents) and annual turnover or balance sheet of no more than €2 million, or uses less than 100,000 kWh of electricity or less than 293,000 kWh of gas a year. Many busy restaurants have more than 10 staff, so check both tests. Microbusinesses are also protected by a 12-month limit on back-billing.
Complain to your supplier first; if it isn't resolved within eight weeks, a small business can usually go to the Energy Ombudsman. Suppliers may only use brokers in a redress scheme for small business contracts (generally fewer than 50 employees).
For card machines, booking systems and the move away from copper phone lines, see phones and broadband for restaurants. Running a smaller daytime site? Our business energy for cafes guide covers that pattern of use.
Related guides
Business energy for restaurants: frequently asked questions
Is there a price cap on restaurant energy?
No. The Ofgem price cap only applies to household energy. Restaurants buy gas and electricity on business contracts, and the price is whatever is agreed in each contract.
Why is my restaurant's gas bill so high?
In most commercial kitchens, ranges, ovens, fryers, chargrills and water heating run on gas, often for long hours across two services. Equipment switched on long before it's needed, or left on through the afternoon gap, adds to it. Your gas contract price also matters, so check when it is due for renewal.
Why does my restaurant use electricity on days it's closed?
Walk-in cold rooms, fridges, freezers and ice machines run 24 hours a day. Some use on closed days is normal, but a high figure can point to worn door seals, dirty condensers or equipment left on that could be switched off.
What happens to the energy supply when I take over a restaurant?
The supply stays on, but you'll be on deemed rates until you agree a contract, and these are usually much higher. Read and photograph every meter on the day you take over, tell the suppliers, and get quotes for both gas and electricity straight away.
Can I leave a restaurant energy contract early if I sell the business?
Usually only by paying an exit fee, because business energy contracts are fixed-term. Some suppliers let the contract transfer to the new owner. Ask about this before you sign and match the contract length to your lease and plans.
Do restaurants pay 5% or 20% VAT on energy?
Most pay 20%. The 5% rate only applies to very low use, under 33 kWh of electricity or 145 kWh of gas a day, which a working commercial kitchen rarely is. VAT-registered restaurants can usually reclaim the VAT.
Is an induction kitchen cheaper to run than gas?
It depends on your gas and electricity prices, your equipment and how you cook, so there's no single answer. Switching also affects your electrical capacity, extraction and menu. Get quotes based on the kitchen you plan to run before deciding.
Can I get one energy contract for several restaurants?
Yes. Restaurant groups can often agree a multi-site contract that brings sites onto one supplier with aligned end dates and consolidated billing. Each site still has its own meters, so compare per-site prices as well as the overall deal.
Who do I complain to about my restaurant's energy supplier?
Complain to the supplier first. If it isn't resolved within eight weeks, or you're unhappy with the final response, a small business can usually take it to the Energy Ombudsman free of charge.
Is Business Utilities Hub an energy broker?
No. We publish guides and, with your consent, pass your details to business energy brokers we work with, all of which belong to an Ofgem-approved complaints scheme. We may be paid for the introduction.