Whether you’re starting a new restaurant or refitting an existing one, this is a common question that crops up. In an ideal world, you’d have enough cash available to buy all-new, top-of-the-range equipment. But this isn’t a situation most people find themselves in.
You have to balance quality against value. Spend too little and you might jeopardise the success of your restaurant if a vital piece of equipment breaks down. But spend too much and you won’t have enough capital available for other things.
So what are your options? Well, there are three main routes you can go down, each with their pros and cons.
Pros and cons of buying new equipment
The advantages of buying new equipment are probably just as obvious as the disadvantages. With a brand new piece of kit, you’re guaranteed that it’ll be shiny and in pristine condition. It may also come with a warranty, so any major defects or breakdowns will be covered by the manufacturer.
Another benefit of brand new equipment is that you can pretty much count on the fact it’ll last you for a while. The chances you’ll need to fork out for repairs or replacement parts any time soon are low.
But these benefits come with a big downside – it will be expensive. Very expensive.
As soon as you buy a new car and drive it off the dealership forecourt, it can lose as much as 11% of its value, instantly. Restaurant equipment is much the same – as soon as you get it, it’s not new anymore and its resale value drops dramatically.
|· You’ll have shiny, pristine equipment|
· It’ll most likely come with a warranty from the manufacturer
· It’s unlikely to need repairs or replacements in the near future
|· It can be expensive|
· The equipment can lose a large percentage of its value as soon as you buy it and use it the first time
Pros and cons of buying used equipment
The biggest advantage of buying used equipment is the cost – you’ll save a lot of money. You can often find great deals on used restaurant equipment, and you’ll be surprised by just how unused some of the equipment is.
Look hard enough and you may be able to find equipment that’s only months old and therefore may still be well into its warranty.
You’ll also have a lot more room to negotiate. Costs for used equipment aren’t as fixed as new equipment so haggle, haggle, haggle for the best deal you can get!
The disadvantages of buying used equipment are practically a reversal of the advantages of buying new.
The first is that the equipment probably won’t be in perfect condition. You should expect a certain degree of wear and tear from the previous owner. It’s almost more likely that the equipment will need to be repaired or have a part replaced at some point soon.
This obviously depends on the age of the equipment, its quality and how it was being used before you bought it.
|· You’ll save a lot of money|
· You can find almost new equipment for a fraction of the cost
|· You’ll have to put up with a certain degree of wear and tear|
· It’s more likely you’ll need to pay for repairs or replacements in the near future
Pros and cons of leasing equipment
This is probably the most flexible option in the list. It also tends to be the one most restauranteurs go for. By leasing the equipment you need for as long as you need it, you can save you a whole lot of money and fuss further down the line.
Leasing gives you access to brand new equipment without the giant upfront cost of buying it outright. As well as being more reliable and less prone to a serious breakdown, any repairs that are necessary will be taken care of for you.
Another big advantage is that you may be able to lease some equipment for free. Some companies will let you hire equipment with no monthly payment if you’re already buying their other products (for example, your coffee supplier may give you a free coffee machine).
As with any contract, you should make sure you read the small print carefully before you sign-up. Specifically, check if there’s a minimum lease period or early termination fees.
|· Much more flexible – lease the equipment only for as long as you need it|
· No massive upfront costs
· You’ll get new equipment for a fraction of the cost
· Repairs and replacement parts will be covered
|· There may be a minimum lease period or early termination fees|
· You won’t build any equity for the future as you don’t own the equipment
To make a success of your restaurant, it’s important to consider your options carefully and plan for the future. Each restaurant is unique, so the option that’s best for yours will depend entirely on your situation.
Whichever way you decide to go, don’t forget that we can help if you need funding to acquire equipment. Apply for a small business loan today and you could have the funds in your account in as little as two business days.