Next-Generation Partner Delivers Managed Energy Services to Restaurants, Retailers and More

In the traditional IT market, MSPs (managed service providers) remotely monitor and manage customers' computers, printers, applications, data protection and security. A similar business model is emerging in the sustainability market, where energy-focused MSPs remotely monitor, manage and optimize customers' energy consumption.

Key MSPs in the energy market include Budderfly -- which private equity firm Partners Group acquired in July 2022. Budderfly, founded in 2007, is based in Shelton, Connecticut. The company has 129 employees listed on LinkedIn as of December 2022.

Budderfly's target customers include businesses with repeatable footprints, such as restaurant chains, assisted living facilities, retail franchises, gyms and fitness centers and REITs (real estate investment trusts), the company says.

So what exactly does a managed energy service provider (MESP) offer? In Budderfly's case, the MESP installs, monitors, and manages a combination of patented technologies, equipment upgrades, and proprietary energy software for its customers at no out-of-pocket cost. From there, Budderfly charges a recurring monthly fee to remotely monitor, manage and optimize those systems. The result: Businesses benefit with lower energy bills, a reduced carbon footprint, more reliable operations, and an improved customer and employee experience, Budderfly asserts.

Budderfly Revenue Growth, Energy Savings for Customers

Budderfly achieved roughly 165% annual recurring revenue growth in 2022, though actual dollar figures for revenues and profits/losses were not disclosed. Noteworthy customers include Burger King, Wendy’s, McDonald’s, KFC, Dave’s Hot Chicken, Subway, Jersey Mike’s, Jimmy John’s, Jack-in-the-Box, Dunkin’, IHOP, O’Charley’s, 99 Restaurants, Outback, and YMCA. 

Noteworthy customer wins for 2022 include an expanded its partnership with with O’Charley’s and 99 Restaurants, both of which are operated by Restaurant Growth Services. The upshot: Budderfly’s Energy Efficiency as a Service will be rolled out to 175 restaurants. Budderfly is spending about $117,000 per restaurant -- and seeking to reduce each restaurant's electric use by 30%. Those restaurants expect to gain "more than $20 million in value to the brands over the term of the 10-year agreement," the companies said.

The Budderfly contract with Restaurant Growth Services involves:

• An energy usage discount and a centralized platform for utility billing management, consolidation, and reporting.
• All non-LED interior and exterior light fixtures will be converted to LED, and rooftop HVAC units at the end of their useful life will be replaced with new high efficiency units.
• Budderfly’s portfolio of connected technologies and controls will help further reduce, measure, and manage energy consumption within the restaurants, the service provider said.

Executive Perspectives: Budderfly and Restaurant Growth Services

In a prepared statement about the deal, Mark Spurgin, chief supply chain officer at Restaurant Growth Services, said: "O’Charley’s and 99 Restaurants collectively spend over $13 million per year on electricity – that is almost $37,000 per day. In the wake of the COVID-19 pandemic, we were seeking ways to conserve our cash flow while also dealing with aging facilities and equipment. The success of our initial roll out with Budderfly demonstrated the huge opportunity to improve our business operations and cut costs, while being better stewards of the environment. We’re thrilled about the growth of our partnership and look forward to bringing additional restaurant locations on board in the year to come."

Added Al Subbloie, founder and CEO, Budderfly: "The brand expansions with O’Charley’s and 99 Restaurants have helped define a year of explosive growth for Budderfly in which we have brought on nearly 900 new customer locations. Our business model is a proven recipe for scalability and impact, and we’re excited to support the O’Charley’s and 99 Restaurants brands on their growth and sustainability journey."

Managed Energy Services: Private Equity Funding

Private equity firm Partners Group of acquired a majority stake in Budderfly for $500 million in July 2022. The deal's overall valuation was not disclosed. Also in 2022, Connecticut Green Bank announced $5 million in secured loan facilities to support Budderfly's market expansion.

Budderfly previously raised funding and financing multiple times. Examples include:

• October 2020: Budderfly announced a $7.8 million equity funding round led by Balance Point Capital and Edison Partners with additional participation from Connecticut Innovations.
• June 2019: Budderfly raised $55 million in a growth equity and debt funding round led by Balance Point Capital, with participation from Connecticut Innovations.
• June 2017: Budderfly raised $22 million funding that included Edison Partners and the state of Connecticut.