EXCLUSIVE: Realizing ROI On Planned Maintenance

If you could save $10,000 in spoiled food by cleaning a filter or changing a worn fan belt on your walk-in before the compressor overheated, you’d do it, right? Would you pay $2,500 to keep all of your refrigeration equipment clean and well maintained to avoid that potential loss and the cost of an emergency service repair?

“A $10,000 refrigeration loss is about four times what our planned-maintenance program on that equipment would cost,” says Glenn Clark, President, Clark Service Group, Lancaster, Pa. 

“I’m absolutely in favor of planned maintenance,” says Tom Thaman, Director-Food and Nutrition, Eskenazi Health, Indianapolis. “A planned-maintenance program might cost $30,000, but if a combi unit goes down because it wasn’t properly maintained, it’ll cost at least $25,000 to replace.” And, he notes, properly maintained equipment will perform better, last longer and save energy.

If planned-maintenance programs will do all of that, then why doesn’t everyone have one? Good question. 

One reason is confusion over what a planned-maintenance program is. Planned maintenance isn’t what a lot of people think of as preventive maintenance although in some cases it can prevent equipment breakdowns—and it isn’t a service contract or extended-warranty-type program.

Think of it this way: Hiring a service company to implement a planned-maintenance program for your equipment is like taking your car into the dealer or shop for scheduled maintenance: changing the oil and fi lters, rotating the tires, checking the belts, cleaning and inspecting the PCV valve, etc. 

“We look at planned maintenance as a way of making sure equipment lasts its expected life cycle,” says David Pogach, LEED GA, LongHorn Steakhouse Facility Manager, Darden Inc., Orlando, Fla.

Another reason is money. Some operators look at the upfront cost and balk, despite potential savings in the long term. Often, money that might be spent on planned maintenance instead is put aside for local and regional bonuses. Or, chains might account for equipment and service costs differently, preferring to replace broken equipment as a capital expense rather than maintain equipment as an operating expense. Perhaps shareholders are putting pressure on companies to deliver profit in the latest quarter. 

In some cases, you might have internal resources to handle planned-maintenance issues for a lot of your equipment. But most of you are outsourcing at least some of your planned maintenance—landscaping, grease traps, window cleaning, hood degreasing and so forth. So, why not do the same for refrigeration, cooking equipment, beverage equipment and ice machines?

Pay Me Now Or… 

“I talk to other facility managers at conferences,” Pogach says. “I don’t believe it’s individuals who don’t believe in planned maintenance. It’s organizations. We know these programs work. They save money, so for us it’s not a debate of whether to spend the money now or later. We maintain our equipment.”

Planned maintenance makes the most sense for equipment that in-house staff doesn’t have the expertise or time to maintain. Most operators who have programs in place start with HVAC because putting people on the roof is a liability issue, and most foodservice employees don’t have the expertise to service HVAC systems. 

“We contract out planned maintenance on HVAC systems because we want to make sure our guests are comfortable,” says Andy Dunmire, V.P.-Design and Construction, Eat’n Park, Pittsburgh. “For a set price, the company we use handles all maintenance and repairs with caveats. For example, if a unit is 10-plus years old and has a cracked heat exchanger, we buy a new one. If it’s 15-plus years old, we replace all necessary parts.”

Planned-maintenance programs also are common for refrigeration equipment. Not only do service companies handle routine cleaning and checks, they also do things like clean and sanitize ice machines. 

“We just had planned maintenance done on our walk-ins,” Thaman says. “The technician told us that we had food stored too close to the fan in the freezer and explained that it’s a bad practice that can cause the compressor to work too hard.”

While routinely cleaning filters and condenser coils doesn’t seem very difficult, particularly on self-contained reach-in refrigeration, many operators feel the service is well worth it. 

“As our restaurants started to get older, we wanted to take care of the equipment,” says Cha Nye Farley, Director-Facilities and Procurement, Smashburger, Denver. “We pulled up the cost of repairs, and often why we needed service was due to maintenance-type issues that perhaps could have been handled by staff. But we want their focus on the customer experience, and we know some things may get dropped at the store level occasionally.”

Hot Or Not? 

Choosing to contract out for planned maintenance on cooking and kitchen equipment often depends on how critical the equipment is to the operation. Employees are usually more familiar with equipment on the line and incorporate cleaning and maintenance into their daily routines.

“We haven’t seen as clear a return on hot equipment,” Pogach says. “There’s a little more redundancy there—multiple burners on a range, usually several fryers—and repairs tend to be quicker and cheaper.” 

“Cooking equipment is cleaned by kitchen personnel,” Dunmire says. “There’s an established cleaning and maintenance schedule on each piece of equipment that store employees handle.”

In some cases, planned maintenance might not address issues of concern anyway. “Our equipment is pretty simple,” Farley says, “and our biggest issue—keeping the oil line from the fryer to the filter clear—is one that planned maintenance doesn’t address, so a program wouldn’t offer as much value.” 

Others, however, find programs for cooking and other kitchen equipment indispensable. “We train employees to keep equipment clean,” Thaman says, “but when it comes to taking it apart to do maintenance, we rely on experts.”

Cathy Babbs, Director-Food and Nutrition Services, Sarah Bush Lincoln Health System, Mattoon, Ill., agrees. While her staff was meticulous about keeping the department’s combi ovens clean, “I didn’t know that the hoses on the combis needed to be replaced, or at least they need to be checked periodically for leaks. If there is a slight pinhole leak, it can cause the pump to go bad, and that in turn causes the steam generator to go bad. That is a $1,500 cost that could be prevented by replacing the hoses on a routine basis,” she says. 

Justin McCarthy, Owner/Operator of two McDonald’s stores in Avon and Lakeville, N.Y., says there are many benefits to planned maintenance. “My restaurants are 18 and 20 years old. Once the equipment is not new, it will break down; it’s just a question of when. So it’s better to have guys who can spot the problem before it happens.

“I need this equipment to make money,” he adds. “So I’d rather have guys who know me and know my equipment come and service it on Monday when it’s convenient for me, and so I can watch and learn what they’re doing, rather than having it go down at the worst time and cost me an emergency service call and lost business.”

Tracking Costs And ROI 

Unless you track your service costs, getting a handle on the potential savings of a planned-maintenance program can be difficult. It’s the “pay me now” part of planned maintenance that often makes operators reluctant to sign up. 

Some, like Thaman and others, instinctively know that planned maintenance is the right thing to do and that even without tracking all of their service costs, planned maintenance is saving them money.

“I totaled all the repair costs on one dishmachine in the old hospital before we moved to our new facility,” Thaman says, “and costs came to $40,000. We bought a new machine even though we knew we were going to be moving to a new building and got a three-year payback by maintaining it properly.” 

Others, like Smashburger’s Farley, know the data is there but haven’t yet assembled it in a way that makes it easy to look at ROI. “Our accounting department, it turns out, has been tracking service costs, so I plan to look at the data to see what our ROI is on planned maintenance.”

The true believers are those who track all of their service data on equipment. “The majority of equipment that needs repair is called in to our 24/7 dispatch call center,” Dunmire says. “The call center has a log that tracks the make, model, serial number and age of the asset. Based on need, we decide whether to repair or replace the equipment in question.” 

That level of detail lets Eat’n Park know that planned maintenance on HVAC, for example, has lowered service calls by one-third and repair costs by 20% per unit on average, according to Dunmire.

“At The NAFEM Show,” he says, “we approach our suppliers and recommend changes on equipment, like moving the location of a switch, because we have such good data on repairs. We know what parts are failing and why.” 

Many service companies will track both the costs of planned maintenance and repairs for operators and provide monthly or quarterly reports. Typically, service companies can provide you with an ROI on planned maintenance within one to two years of starting a contract.

Even those comparisons, though, don’t take into account other tangible benefits of planned maintenance. Keeping all of your equipment in peak operating condition also will improve performance, lower utility bills and lengthen the life of the equipment. 

While hard numbers may drive your decision, ultimately it comes down to how you and your company think about the business.

“I can’t catch everything,” McCarthy says, “but a lot less stuff happens when I maintain all the equipment. Maybe I wouldn’t think that way if I owned 100 restaurants, but with only two, I’m the guy it affects.” 

Planned-Maintenance Pointers

• Contract with service companies you normally do business with and trust. If the company doing maintenance also is responsible for service, a lot of potential problems likely will be caught early during maintenance calls. 

• Ask your service company who will be conducting planned maintenance on your equipment. Some companies use different teams to do maintenance. Ideally, the technician doing maintenance should be the same technician normally assigned to service your equipment, so he’s familiar with it.

• Ask your service company how much experience the techs who maintain your equipment have. Although the service company may charge less, a less experienced tech may not spot potential problems as easily as someone who’s been in the field for a long time and knows your business. 

• Find out if the service company doing planned maintenance will offer a discount on service. Often, companies will discount parts by 10%, reduce labor fees or waive travel fees on service if they already do your maintenance.

• Have the provider audit your stores and establish a baseline of what’s needed before bidding the contract. 

• Contract only for what you need; make sure your service company is flexible and open enough to adjust the plan. If you need maintenance on certain equipment only quarterly instead of monthly, your service company should recommend it.

• Schedule work at a convenient time when a manager can watch technicians and learn pointers on keeping equipment in good working condition. 

• Track what service companies do during maintenance calls. The best companies and technicians don’t just tick off a checklist. “We use an ‘action list,’ not a checklist,” says Bruce Hodge, President, General Parts, Bloomington, Minn. “For example, instead of ‘check gas pressure,’ on a range, it says, ‘record gas pressure.'”

• Train employees to track equipment hiccups and problems so that they have a ready list of things to check when the maintenance team arrives,” says Ken Beasley, President, Key Food Equipment Services, Burnaby, B.C.