Leap of faith

Neil Kudrinko spent a half-million dollars on a green renovation. It's paying off for the planet, and his bottom line

Neil Kudrinko is the embodiment of a green grocer by both his profession and politics. In February, the owner of Kudrinko’s, a grocery store in the tiny Eastern Ontario town of Westport, was the Green Party candidate in a byelection to replace outgoing Leeds-Grenville MPP Bob Runciman. It was Kudrinko’s first shot as a candidate, and he finished a respectable third, with 2,140 votes–the best finish ever provincially by a Green candidate in the longtime Conservative stronghold.

Unlike a lot of would-be politicians, by the time Kudrinko put his name on the ballot he’d already put his money where his mouth is. Over the past two years, he’s invested $578,000 in an environmentally friendly renovation of his family-run grocery store. The upgrade fit in perfectly with Kudrinko’s politics. But, as he admits, the changes also made logical business sense.

My dad said to me, ‘Neil, this is starting to get really expensive.’ And I said, ‘Dad, it’s going to work.’ He took a leap of faith on me

That’s a big reason Kudrinko was happy to share the upgrades he made and the reasons behind them with Canadian Grocer’s readers. “Near and dear to my heart is running a successful business,” he explains. “There’s one message that I feel is important from a political standpoint: the changes we’re asking people to make in their homes and businesses are positive changes that will result in greater savings and profitability.”

Start with energy

As with other grocers, energy is one of Kudrinko’s major expenses. While reviewing his operating costs, he realized energy costs were becoming even more of a drag on profitability, skyrocketing from $48,000 in 2006 to $63,000 in 2007 and $75,000 in 2008. Not surprisingly, a 50% increase in energy costs in just two years was a big motivator. “Rising energy costs are probably the biggest threat to independent grocers as far as the cost of operating their businesses,” says Kudrinko. “There’s not much I can do about the price of oil, but what I can control is the amount of electricity and fossil fuel we use in our day-to-day operations.”

While some savings could be achieved by simply picking off what Kudrinko calls “low-hanging fruit,” such as installing air curtains on coolers, he opted for major renovations: a new roof with significantly upgraded insulation (an additional R40 on top of the R10 already in place); new propane-powered rooftop furnaces to replace an inefficient oil-powered model; new ductwork; a new refrigeration system; new energy-efficient lighting and a new ceiling complete with fans to improve air circulation throughout the store. All of this was augmented by a series of cosmetic upgrades such as a new stucco façade.

With the original part of the store constructed in 1964, Kudrinko knew it would be expensive to bring it up to today’s standards. His father, Ross (who purchased the store with wife, Susan, in 1990 and still helps out when he’s not wintering in Arizona), grew increasingly concerned as the renovation costs rose. “He said to me, ‘Neil, this is starting to get really expensive.’ And I said, ‘Dad, it’s going to work,’ ” Kudrinko recalls with a laugh now. “He took a leap of faith on me.”

That faith was largely justified by the store’s new refrigeration system, which has already paid significant dividends during heat waves like the one that enveloped much of Ontario in July.

A computer to keep things cool

Where previously the store’s coolers had been run by individual remote compressors, its 80 feet of medium-temperature counters, 27 doors of frozen space and five walk-in coolers are now all linked to a Hussmann Refrigeration Protocol system. (One meat counter works on a separate rooftop condenser since there wasn’t enough capacity to accommodate it, and it didn’t make financial sense to invest in a larger system for just one cooler.)

The system features a computer that monitors the temperature in each case every three minutes. Each case is equipped with a valve capable of opening and closing by as little as one-400th of a degree, ensuring that precisely the right amount of coolant is released into the cooling coil. The old system worked on pressure control, where the amount of coolant released into the system could vary by as much as 10%. “It was doing the job, but it was a guesstimate,” explains Kudrinko.

Refrigeration is one of the main cost centres for grocers. B.C. Hydro pegs the average store’s consumption at 52.5 kilowatt-hours of electricity and 38,000 BTU of natural gas per square foot per year, with refrigeration accounting for about 36% of that total. Synthetic cooler refrigerant is also a contributor to greenhouse gases, with some estimates claiming that between 10% and 30% of the refrigerant used in cooling systems escapes into the atmosphere each year.

Greening the grocery store

A U.K. advocacy group called the Environmental Investigation Agency (EIA) claims in an online report that supermarkets are making a “huge contribution” to climate change. As part of an ongoing series of reports called “Chilling Facts,” the EIA provides data on how U.K. supermarket chains are maximizing energy efficiency and curbing emissions of greenhouse gases and CFCs.

Kudrinko’s upgrades have not only contributed to a sizeable reduction in the store’s carbon footprint–its CO2 emissions dropped from 173 metric tons in 2008 to 106 metric tons in 2009–but have also nearly eliminated cooler breakdowns.

“This is a genuine way to tackle the impact our businesses have on the environment,” says Kudrinko. “Some people might say, ‘I buy my electricity from a green energy supplier so I have no guilt’ or, ‘I buy carbon offsets so I don’t have to worry about it,’ but you’re still consuming and you’re still emitting. This way, I’m doing my best to not only make my business more profitable, but also lessen the impact I’m having [on the environment].”

Steve Cox, co-founder of Carbon Counted, a Toronto-based not-for-profit that enables businesses to calculate and manage their carbon footprint, calls Kudrinko one of the “most passionate” advocates for green business he has ever encountered.

“He’s got the interest as far as saving money, but he’s also got the environment in mind, which is a bit unusual for a businessman in his position,” says Cox. “He’s checking the dollars and cents to make sure what he’s investing makes sense as part of reducing his environmental impact, but that’s not the whole deal when it comes to Neil.”

The results

Kudrinko’s upgrade has had a big impact on the store’s energy costs, which had dropped by an estimated $25,000 by the end of fiscal 2009 in October (the new system went live in March last year). However, Kudrinko notes, that figure fails to take into account the impact of rising energy costs. “It’s not only that $25,000 I saved…but if you have an increase in the unit cost of buying energy, my $25,000 savings could have been a $30,000 spend. It’s not just what you saved based on last year’s consumption, it’s what you would have spent had you not done the work.”

John Scott, president of the Canadian Federation of Independent Grocers, says the “greening” of grocery stores is gaining momentum. “It is expensive, but I think [operators] have to look at it as an investment that’s going to pay off. Will people rush out and do this tomorrow? Probably not. But 10 years from now, virtually all the stores will move in that direction.” And while some independent grocers may balk at spending a half-million dollars on an environmental retrofit, Kudrinko says they have to look beyond short-term costs to the long-term benefits.

“Every time the price of a barrel of oil goes up $1, my payback on this investment gets shorter,” he says. “We all know which direction energy costs are going to go, and those are directly related to the effect energy consumption has on the environment. [Operators] might as well get reconciled with the fact that that’s the general direction things are going and figure out how to make their businesses work in that environment.”