Running a restaurant is hard work, with many moving parts to manage and balance for smooth operations. Even though it’s rewarding, it’s also an expensive undertaking. With rising costs, making changes to save when and where possible can help boost profits and sustainability. You need hot water for all facets of your restaurant—cooking, cleaning, and sanitization. Ensuring you have an energy-efficient water heater is a step in the right direction towards saving money.
Why Should You Strive to Be an Eco-Friendly Restaurant?
Eco-conscious dining is a restaurant trend that is here to stay. Customers spend money with businesses that share their values, including environmental impact considerations. Adopting eco-friendly practices reduces your carbon footprint and shows your customers you care about them. A cleaner, healthier environment and broader consumer appeal? It’s a win-win.
Understanding Commercial Water Heaters
Hot water is essential for any restaurant, from washing dishes and sanitizing utensils to food preparation. However, not all water heaters are created equal.
Conventional Storage Water Heaters
A conventional storage water heater holds water in a tank, heats it, and maintains the temperature for use as needed throughout the day. Standard storage water heaters have tank sizes ranging from 30 gallons to 130 gallons.
While historically these have been the most common type of water heater on the market, they are only about 85% efficient and are getting phased out in favor of greener options. A law that goes into effect in 2026 will require all commercial gas-fired storage water heaters in the US to achieve a minimum thermal efficiency (TE) of 95%. This means utilizing condensing coils or tubes instead of the standard atmospheric natural draft venting.
High-Efficiency (HE) Storage Water Heaters
High-efficiency storage water heaters look similar to conventional water heaters and use similar fuel, but work differently. With a design focused on reducing energy consumption, HE water heaters utilize sealed combustion and an internal heat exchanger designed to extract heat from the exhaust gases to increase water temperature. This is referred to as “condensing technology” because when the exhaust gases have reached the end of the heat exchanger, they have cooled so significantly that it results in condensation, indicating all possible heat has been extracted. Smarter use of available energy means these units save you money in the long run. HE storage water heaters offer tank sizes between 50 and 120 gallons.
Many high-efficiency water heaters use tanks, and the technology keeps improving. Two of the best high-efficiency condensing storage tank water heaters are Rheem Tritons and A.O. Smith’s Cyclone models.
Tankless (On-Demand) Water Heaters
Tankless (on-demand) water heaters don’t store hot water; they heat it as needed, and are not recommended for commercial use, especially in hotels, restaurants, and breweries. Any business with a high volume of water use needs a storage tank water heater. Tankless models work better in homes because there is a smaller demand for hot water. These systems were popular because they prevented standby heat loss. However, in commercial buildings, they work a lot harder and are not an energy-efficient way to meet your restaurant’s hot water demands.
How Energy-Efficient Water Heaters Save Your Restaurant Money
Investing in an energy-efficient water heater improves finances and operations. Here’s how:
Lower Energy Bills
Appliances with the ENERGY STAR designation use less energy while giving you the same (or better) performance. Whether you use gas or electric appliances, energy costs decrease by 30 to 50% over time.
The Green Restaurant Association reports that a restaurant uses an average of 300,000 gallons of water annually. Over half comes from the kitchen and dishwashing, so the average restaurant uses 156,000 gallons per year for kitchen tasks alone. It’s not all hot water, but cutting the cost to heat all that cold water is a tremendous savings. The higher the volume of water needed (gallons per minute), the more hot water storage you would need, which is why we don’t typically recommend tankless water heaters for high-demand settings. Tankless water heaters are affected by where you live and ground water temperatures, making them highly inefficient in colder regions. For restaurants, high-efficiency storage tank water heaters are the most eco-friendly choice.
With the money you can save using a high-efficiency water heating system, you can invest in other green initiatives, like expanding your menu to include more vegan options, composting options to reduce food waste, and more.
Increased Efficiency & Faster Heating Times
High-efficiency models provide faster water heating, so there is less downtime with dishwashing and food preparation. They also help to reduce water waste. You’ll be able to keep up with busy mealtime rushes without added stress, while cutting down overall water usage.
Government Incentives & Rebates for Energy-Efficient Water Heaters
If you can’t afford to switch to a better water heater, you may be able to offset the cost with rebates and incentives from the government or your utility company.
Federal Tax Credits & Incentives
The IRS offers tax deductions to building owners who install energy-efficient equipment as part of the interior lighting systems, HVAC and hot water systems, or the building envelope (walls, roofs, windows, and doors). In 2023 and beyond, the deduction is calculated as:
- $0.50 per square foot for a building with 25% energy savings
- Plus $0.02 per square foot for each percentage point of energy savings above 25%
- Up to a maximum of $1.00 per square foot for a building with 50% energy savings
If you own a 4,000-square-foot restaurant and invest in upgrades that create 50% energy savings across the entire space, you’ll save $4,000 in taxes.
These deductions and rebates are subject to change, so be sure to check the Energy Star Rebate page or call Reliable Water Services.
State and Local Utility Rebates
Many state and local governments offer rebates and discounts for upgrading to ENERGY STAR-certified water heaters. Enter your zip code at the ENERGY STAR rebate finder to find what you may be eligible for.
Utility Company Incentives
Major utility companies may offer cash rebates for switching your current water heater to energy-efficient models. Check the Database of State Incentives for Renewables & Efficiency (DSIRE) to determine what you qualify for. In Wisconsin, for example, you can get instant discounts on several energy-efficient products, including LED lighting, water-saving products, and more.
Cost Analysis: How Much Can You Save By Making the Switch from a Conventional Water Heater?
Deciding whether to make the switch can be difficult if you don’t crunch the numbers first. Consider your unique requirements based on your restaurant’s size and fuel type. If you don’t have a natural gas line, you’d have to pay to install one. So, even though natural gas is considered more energy efficient than electricity, it’s not necessarily the most cost-effective option for you.
Consider the following information when choosing a water heater:
1. Determine your restaurant’s hot water needs
2. Create a cost comparison for each type of tank water heater and include
- The initial cost of the unit
- The installation cost
- The water heater’s daily, monthly, or yearly operational costs
- Annual savings
- Rebate, incentive, and tax break cost reductions
4. The lifespan of each unit and maintenance needs
Conventional and high-efficiency tank-type water heaters have lifespans of around 10 to 15 years, depending on use and durability. Additionally, high-efficiency storage tank water heaters require far less overall maintenance.
What makes the most sense depends on your restaurant’s size, location, water usage, and whether you’re using gas or electricity. For extra savings, don’t forget to turn off booster heaters when your restaurant is not open.
Upgrade for a Greener, More Energy-Efficient Restaurant
Switching your water heater may feel like a behind-the-scenes business improvement, but the benefits ripple across the entire operation. You’re not only saving money on energy and water usage to cut your operational expenses, but also reducing your carbon footprint so that you can feel better about your environmental impact. You’re doing this without sacrificing service or quality, which helps you stand out in an increasingly competitive market.
Since tax breaks and rebates are available to help you shoulder some expenses, changing to an eco-friendly model doesn’t have to break the bank. The key is choosing the right water heater for your establishment to maximize operational efficiency and long-term savings.
That’s what the team at RWS is here to help you do. We can help you find the right water heater for your needs and budget based on your available space and fuel type. We offer rental and service programs to keep your restaurant running smoothly, so you never have to worry about water heater failure.
Let our experts take some of the stress away so you can focus on what you know best – running your restaurant.
