When facilities leaders report their budgets, the focus often lands on hourly labor rates or total annual repair spend. Yet these line items tell only part of the story. The real costs of facilities are buried deeper, in overlooked inefficiencies, hidden invoice padding, energy waste, and poor asset lifecycle management. Understanding the Total Cost of Ownership (TCO) for facilities is now essential for multi-site operators in convenience, grocery, restaurant, and retail.
Beyond the Hourly Rate
A common misconception is that the hourly labor rate defines cost. In reality, labor rates typically account for only 30 to 40 percent of total work order cost. The remainder comes from factors such as parts markups, excessive time on site, duplicate work orders, and administrative inefficiencies.
This gap often surprises leaders. A vendor may offer a competitive hourly rate, but if jobs consistently overrun estimated time, or if parts are billed at inflated rates, the savings quickly evaporate. In an inflationary environment where maintenance costs are rising by 5 to 17 percent annually, these hidden costs become an unsustainable drain on profitability.
The Inflation Squeeze
The pressure is mounting across industries:
- In grocery, repairs and maintenance costs increased 17.3 percent from 2022 to 2024, outpacing overall operating expense growth.
- In convenience, monthly operating expenses have increased 40 percent since 2021, with repair and maintenance specifically up 38 percent.
- Across retail and restaurants, facility budgets are increasingly flagged as the third or fourth largest contributor to Direct Store Operating Expenses (DSOE), often surpassing utilities in year-over-year growth.
With margins for retailers and grocers hovering at 2 to 3 percent, even a 1 percent increase in facilities costs can translate into millions in lost profit.
Case Study: The Callback Problem
One major grocery chain saw 19 percent of break-fix work orders recur within 30 days. These callbacks led to nearly $23,000 in excess spend at a single site in one year. Repeat issues stem from poor first-time fixes, rushed vendor selection, or lack of preventive maintenance.
Every callback amplifies TCO, as it adds labor, parts, and administrative expense. More importantly, it increases downtime, which directly impacts revenue. For example, in convenience stores, foodservice and beverage equipment represent 60.8 percent of in-store profit dollars. An unreliable asset can quickly erode margins.
Energy: The Silent Cost Driver
Energy consumption represents another hidden dimension of TCO. Preventive maintenance on HVAC systems has been shown to reduce operational costs by 12 to 18 percent annually. In one study, locations with preventive maintenance saw energy costs fall by 16.7 percent in year one, but when programs were paused, costs spiked back to baseline within two quarters.
Energy inefficiencies multiply across large portfolios. A single underperforming HVAC unit can consume thousands of extra kilowatt-hours annually, often hidden in utility bills that are not linked back to asset performance data.
The Administrative Burden
Administrative costs are another overlooked piece of TCO. Managing hundreds of vendors, negotiating rates, tracking compliance, and processing invoices consumes enormous internal resources. Research indicates that 80 percent of CMMS users fail to leverage all available features because systems are too complex or underutilized.
This underutilization forces facility managers to rely on manual processes, resulting in duplicate tickets, misrouted work orders, and billing errors. Platforms like VixxoLink address this by automating duplicate ticket identification, quote reviews, and invoice validation, reducing administrative overhead and eliminating billing inconsistencies at scale.
Technology as a Cost Control Engine
Modern FM platforms are reshaping TCO analysis. VixxoLink integrates cost validation directly into workflows, leveraging 40 years of historical work order data to benchmark fair pricing. Automated invoice audits prevent inflated charges on parts and labor, which typically average 14 percent and 9 percent above market respectively.
In one convenience chain, these audits delivered $2.6 million in savings over 12 months. Additionally, AI-enabled tools like VITA accelerate technician troubleshooting, improving job completion rates by 1.4 percent across portfolios. At scale, that small percentage represents tens of thousands of hours and millions in avoided downtime.
Preventive Maintenance as Margin Protection
Preventive maintenance remains one of the most powerful tools for reducing TCO. Research shows that unplanned maintenance is three to nine times more expensive than scheduled care. For refrigeration systems, preventive maintenance not only avoids costly product loss but also stabilizes repair costs within 6 to 12 months of implementation.
Case studies consistently show that portfolios investing in preventive maintenance see 35 to 40 percent fewer repair work orders after three years compared to portfolios that defer maintenance.
Redefining the Facilities Scorecard
To truly account for TCO, facilities leaders must expand their scorecards beyond hourly rates and total spend. A comprehensive view should include:
- Invoice Accuracy: Percentage of invoices validated or corrected before payment.
- Callback Rate: Percent of repairs repeated within 30 days.
- Asset Uptime: Downtime hours per critical asset class, linked directly to sales impact.
- Energy Efficiency: Year-over-year energy cost per site, adjusted for square footage and regional climate.
- Administrative Efficiency: Ratio of facilities FTEs to sites managed, with technology adoption factored in.
By tying these metrics to customer experience and profit outcomes, facilities teams can reposition themselves from a cost center to a strategic growth enabler.
The Leadership Mandate
For VPs of Facilities and Operations leaders, the shift toward TCO is not optional. The pressures of rising operating costs, thin margins, and heightened customer expectations demand it. Brands that continue to measure performance with outdated benchmarks risk falling behind competitors who are leveraging transparency, data, and predictive insights to control cost and protect revenue.
The mandate is clear:
- Stop focusing on labor rates. Measure what matters, which is total invoice accuracy, downtime, and callbacks.
- Use data to predict failures. Proactive asset management is no longer aspirational, it is achievable with AI-driven insights.
- Link facilities to revenue. Every asset failure represents not just a repair, but a potential lost customer.
- Make TCO a board-level discussion. Facilities budgets directly affect profitability, yet too often they remain buried in operations reports.
Conclusion
Facilities management is no longer about keeping the lights on at the lowest possible rate. It is about protecting profit margins, preserving brand reputation, and ensuring customer loyalty. The only way to achieve this is by embracing a Total Cost of Ownership mindset.
By factoring in invoice overages, callbacks, energy inefficiencies, and administrative costs, leaders can finally see the full picture of their spend. More importantly, they can unlock savings, reduce downtime, and reinvest in the customer experience.
In an era of rising costs and intensifying competition, the brands that thrive will be the ones who understand that the true cost of facilities goes far beyond the hourly rate. It is time to redefine the economics of facilities around TCO and lead with transparency, data, and discipline.
