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Market Segments Program Guide

Background and Purpose

CEE launched the Commercial Kitchens Initiative in 2005 to provide clear and credible definitions in the marketplace as to what constitutes highly efficient energy and water performance in cooking, refrigeration and sanitation equipment and to help streamline the selection of products through a targeted market strategy based upon the unique features of each particular foodservice market segment.

Since 2005, CEE has developed a suite of specifications to identify energy and water efficient commercial kitchen equipment, tracked availability of commercial kitchen efficiency programs, and documented the approaches and impacts of existing programs. All of the resources associated with these activities can be found on the CEE Web site. Additional resources and specifications have been developed by the ENERGY STAR program, including specifications and guidance for operators and efficiency program administrators.

This document intends to add to these existing resources by centrally capturing the experiences of efficiency program managers administering commercial kitchens programs in different markets and for different market segments. The objective of this document is to provide general committee guidance to commercial kitchens energy and water efficiency program administrators as they consider program design and delivery strategies for the range of market actors owning or operating commercial kitchens.

This document was created by representatives from organizations participating in the CEE Commercial Kitchens Committee based on their working knowledge and unique program experiences. This document does not provide CEE recommendations on program design, strategies or delivery approaches. Rather, the guidance is intended as a committee reference tool. It includes general program design and delivery considerations that CEE members may find helpful as they develop new program services to one or more foodservice industry market segments. The market segments discussed are presented in order of familiarity, and the information included is not intended to be comprehensive. The document represents the combined knowledge of the CEE Commercial Kitchens Committee participants to date and will be updated as appropriate as this committee gains more program experience and knowledge.

Market Overview

Table 1: Commercial Kitchens Market Segments

Market segment	Annual energy consumption for water heating, cooking, and refrigeration (trillion Btu)2
Restaurants	242
Education	81
Healthcare	107
Business and Industry	63
Hotels and Motels	188
Retail	132
Supermarkets	134
Other	varies

Each of these market segments provides opportunities for promoting commercial kitchen efficiency programs. However, each segment differs in terms of how purchasing decisions are made, the value they place on energy and other sustainability priorities, and where and how to reach potential purchasers. Following a brief overview of typical commercial kitchen efficiency program delivery approaches, this document will examine the market segments most commonly targeted by efficiency programs, including how decisions are made within each segment, common barriers, and avenues for program promotion. The market segments identified are defined very broadly and the organization of this document is not intended to convey a preferred market characterization approach.

Program Delivery Approach Overview

The best program approach for a given market will depend on many local and regional factors, including the program regulatory environment, program objectives and timelines, existing resources, target audience, synergy with existing programs, industry relationships, and others. This section is intended to outline and differentiate some of the current, general program approaches to build understanding of potential program pathways related to different market segments. The section describes four typical approaches program administrators use to reach the foodservice industry: industry partner focused, end-user focused, market segment focused, and intra-program focused. Other approaches may be more appropriate or preferred depending on the program objectives and unique program environment of a given CEE member.

Industry Partner Approach

The most common program delivery approach is to work through industry partners like dealers and distributors to communicate program offerings to end customers. This approach is discussed in detail in ENERGY STAR for Commercial Kitchens: Helping Customers Reduce Costs. Using this approach, programs educate dealers, manufacturer representatives, foodservice consultants, and other industry partners on program offerings, who in turn promote programs to end customers. In this approach, program administrators leverage the interest of industry partners who wish to increase sales of efficient equipment and gain a competitive advantage over companies that do not promote energy efficiency incentives or products. This approach can provide an effective way to reach many market segments at once because these industry partners often reach most purchasers of commercial foodservice equipment within a given territory. It is important to note that industry relationships take time to develop, and ongoing efforts to keep partners up to date and involved in the program are keys to the success of this type of program delivery strategy.

End-User Approach

Some programs have opted to focus program delivery activities more on end users than on upstream partners. These programs deliver programs through service technicians and account representatives directly to end use customers (e.g., a restaurant owner). This approach can be effective for programs with account representatives that have the ability to fill this role or in areas where industry partners resist participating in programs. This approach can also work in conjunction with an industry partner approach, as end users will help to create a “pull” effect for efficient equipment or services that can stimulate industry partners to more actively participate in marketing the programs.

Market Segment Approach

For some market segments, such as the chain (multi-unit) restaurant segment, some programs use a segment focused approach that is delivered through an account representative or market manager. In this approach, customers will have a dedicated account representative or staff person to help that customer identify and take advantage of program opportunities that apply across many locations. This approach may be costly for certain market segments, such as independent restaurants or bars, as the energy savings potential for a single location may not justify the cost of a dedicated program account representative or staff person.

Intra-Program Approach

Finally, some program administrators deliver broader program offerings for customers that may own or operate commercial kitchens but that have a larger portfolio of efficiency opportunities. For example, many program administrators offer sector type programs for schools, healthcare markets, or others like grocery markets. Commercial kitchens program managers may reach these segments through an industry partner program approach; however, many have also found it effective to collaborate with their program manager counterparts for these larger segments on commercial kitchen program offerings.

Regardless of which overall program approach is selected, many programs have found targeted outreach to specific market segments to be an effective way to increase program participation³.The next sections are compilations of program knowledge regarding the decision making process, external resources, events, stakeholders, and marketing activities for a range of market segments containing commercial kitchens. These market segments are presented in order by the segment with the most amassed body of program knowledge to the segment with the most limited accumulated knowledge base.

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