Image: Owner of coin-operated laundry
Charles Krupa  /  AP
Jim Whitmore said the energy costs at his coin-operated laundry in Salem, Mass., have gone up 10 percent to 15 percent in the last year, is in the process of replacing his washers and dryers, and is searching for machines that will use less energy and water, reducing his costs over the long term.
updated 11/7/2007 1:40:58 PM ET 2007-11-07T18:40:58

The lights go out at night after the last wash at Jim Whitmore's five coin laundries — no longer does he use a fully lit store as advertising. And at Todd Waldemar's Wing Zone store, he's shutting down some of the fryers during off-peak times.

Small business owners are getting pinched by the soaring prices of oil, gasoline and other fuels, eating into their profits as they gas up vehicles, heat and cool their premises and run machinery. Often, they turn to commonsense solutions to save energy and money.

For example, no longer flooding a store with light at nighttime.

"We used to use it as a way to advertise our stores — people drive by at night and would see clean stores," said Whitmore, whose laundries are in the Boston area. He said his energy costs have gone up 10 percent to 15 percent in the last year.

Small businesses have had to become creative and smarter to cut energy costs. Companies that do a lot of deliveries as part of their business — florists, for example — have been reducing the number of delivery runs they make each day. They're also using mapping software to find the shortest routes, and making sure vans and trucks are filled as much as possible to capacity.

Many that consume a lot of energy buy contracts ahead of time to get oil or natural gas at a set price. And many business owners invest in more energy-efficient machinery or switch their heating systems to wood or other alternative fuels from oil or natural gas.

Whitmore is in the process of replacing his washers and dryers, and is searching for machines that will use less energy and water, reducing his costs over the long term. He sees a side benefit of going greener: By advertising that his laundries are more environmentally friendly.

"Hopefully some of it will flow to the bottom line and help pay for the new equipment," he said.

At Ranch Rudolf, a resort in Traverse City, Mich., owner Sid Hamill has replaced most of his heating system with a wood-burning furnace. He estimates it's saving him between $10,000 and $12,000 a year in fuel costs.

Since his business is located on 195 acres of land, he cuts most of the wood he burns from his own trees.

"The wood works well for me," Hamill said, and estimated that the new heating system "basically has paid for itself."

He's still using some regular fuel, but is hoping that fairly soon he'll be able to switch the entire property to wood-burning energy.

Rising energy costs are forcing some companies to shorten their operating hours — a sacrifice in particular for restaurants that pride themselves on being open 24/7.

Phil Greifeld, chief executive officer of the Huddle House restaurant chain, said the company is allowing its less-profitable franchisees to close at midnight, although Huddle House has advertised itself as "always open, always fresh, 24 hours a day."

"There was a lot of internal debate about it, but it's a good thing we did that in terms of helping people to control their costs," Greifeld said. The result: Those restaurants that are closing at midnight are making more money.

Other steps Atlanta-based Huddle House is taking include reconfiguring its seating arrangements, to allow restaurants to accommodate more customers and increase their volume. The company, which has 440 restaurants in 17 states, is also working with equipment manufacturers on burners that turn the gas on when a pan is placed on the stove and turn it off when a pan is removed.

"It really does add up" in saving money on energy, Greifeld said, and added about cutting costs, "it's something you have to work on day in and day out."

While businesses try to cut costs as much as possible, most are ultimately forced to pass some of the higher energy prices on to customers. Delivery charges are going up, manufacturers are repricing their goods and restaurants are raising their menu prices. Generally, small business owners say their customers understand — energy prices are going up for them as well.

Waldemar uses independent delivery drivers for his Norfolk, Va., Wing Zone stores, and they're asking for more money per trip. "Eventually, it's passed on to the consumer, because that's how it works," he said.

But Waldemar is also contending with rising fuel costs for cooking the chicken wings and other food he sells, plus higher electricity prices. He estimates that his propane costs alone have risen 30 percent to 40 percent over the past year.

So, one solution is to turn off unused fryers during down times.

"There's only so much I can do," Waldemar said.

He's also looking at more fuel-efficient equipment as he plans to expand. He has two stores now, and plans to open one more in January and another in March.

Raising prices isn't easy, though, for many small business owners, because of the competition they face. Whitmore noted that his pricing is expressed in minutes — the number of minutes a customer gets of dryer time per quarter. He can cut the drying time only so much before customers, who tend to be lower-income and not able to pay much more, might go elsewhere.

"We're in a competitive market, and our competitors are not always eager to play ball," he said.

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