Restaurant equipment leasing can be an affordable way for restaurants to get the equipment they need at a price they can afford. Through leasing, you can use the equipment for a monthly fee. Depending on the buyout options on your lease, you can easily purchase the equipment at the end of your lease term. However, before you sign the paperwork, you need to make sure you understand all the fine print, including type of lease and what types of options you have at the end of it.

Action Steps
The best contacts and resources to help you get it done

Operating lease

In an operating lease, the restaurant owner is able to use the restaurant equipment, but the lessor still maintains ownership of the equipment. This is often a good plan for equipment that needs to be regularly updated, as you can simply return the equipment at the end of the lease. There is no requirement to purchase it.

I recommend: Learn more about operating leases through Rutgers University.

Buyout options

Many leases include a buyout option at the end of the lease. This means that you can purchase the equipment at the end of the term for a previously agreed upon price. In some cases, this price may be the fair market value (FMV), while in others the price may just be one dollar. However, you should note that a low buyout price means higher payments throughout the lifetime of the lease.

I recommend: Access Equipment Leasing describes the types of buyout options available to lessees.

Lease to own

A lease to own agreement is a way for restaurant owners to finance their equipment. Restaurant owners simply pay a monthly fee to lease the equipment. At the end of the lease term, they own. Research this method thoroughly before decided to use it, as you may end up paying much more than expected.

I recommend: Learn about lease to own programs from Central Restaurant Financing.

Straight lease

In a straight lease, a restaurant owner has no responsibility at the end of the lease. They simply return the equipment back to the lessor.

I recommend: You can read more about straight leases from Heritage Coach.

Soft costs

The soft costs of equipment leasing include installation, training and repairs. Many restaurant equipment leasing companies include the soft costs in the cost of the lease.

I recommend: Learn more about soft costs from ContractingBusiness.com. Restaurant Funding USA is an example of a company that includes the soft costs in their lease arrangements.

Preventative maintenance contracts

Preventative maintenance contracts are often part of restaurant equipment leasing because the lessor wants to ensure that the equipment remains in top shape. This involves having a professional periodically look at the equipment to catch any problems before they become a major issue.

I recommend: Arco describes their preventative maintenance contracts.

To rent or own, that is the question. Purchasing equipment for a new restaurant represents the majority of start-up capital. Stoves, POS systems, refrigeration and furniture don't come cheap. Many new restaurant owners opt to lease equipment, rather than buy it outright. Restaurant equipment leasing has many benefits, including extended warranties and upgrades. Another bonus of leasing restaurant equipment is that you can have a top-of-the-line model installed for a fraction of the retail price.

When you decide to lease restaurant equipment you will sign a contract for a certain period of time (usually monthly or yearly) and will pay a set amount for that piece of equipment each month. You can lease almost any piece of restaurant equipment available, however, certain pieces of restaurant equipment are better suited for leasing than others. Leasing restaurant equipment that typically has a short life span is the most economical choice for a new restaurant. Ideal restaurant equipment for lease include:

1. Ice makers

2. Coffee makers

3. Dishwashers

Action Steps
The best contacts and resources to help you get it done

Find restaurant equipment lease quotes

Leasing restaurant equipment is big business. Don't jump at the first price you get from a restaurant equipment leasing company. Shop around for the best prices. As part of the leasing options, these companies will usually deliver and set up your restaurant equipment and provide all the necessary maintenance and upgrades during the tenure of the lease.

I recommend: Lease restaurant equipment through A Best Kitchen, who offers both large and small restaurant equipment.

Decide if restaurant equipment for lease is really the better deal

A restaurant equipment lease may cost you more money in the long run. Restaurant equipment leasing rates increase over time, so you may end up paying far more than if you bought the piece of equipment outright. Do the math and figure in yearly increases. Commercial restaurant equipment with long life spans, such as ovens and fryers may cost you less over time buying them outright.

I recommend: Shop and compare prices at J&R Restaurant Equipment, which carries restaurant equipment for sale, lease and rent.

Use in-house restaurant equipment financing to save money

Many companies who lease restaurant equipment also offer in-house financing. This is ideal for restaurants just opening or existing restaurants who need to upgrade certain equipment. Leases vary from long-term capital leases to short-term operating leases. A capital lease is equivalent to a rent-to-own option, while a short-term lease is ideal for renting equipment you only need for a few days or weeks, such as catering equipment.

I recommend: Restaurant equipment leasing companies that offer in-house financing, up to 100%, include Capital Funds Leasing and Keystone Leasing.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Restaurant equipment financing is subject to credit checks. So if your credit is not up to par, then leasing restaurant equipment may not be an option.
• •  You can save money by purchasing used commercial kitchen equipment. However, unlike restaurant equipment for lease, these items have no warranties or guarantee that they will work for any length of time.

Restaurant equipment leasing is a great way to get the equipment you need without spending a lot of capital. This is especially true if you are just starting in the restaurant business or if you need specialized pieces of equipment for a short period of time.

However, it’s sometimes easy to let restaurant equipment finance get in the way of long-term profit goals, especially if you aren’t wary of hidden costs in the restaurant equipment lease. As you consider whether a restaurant equipment lease is right for you, you should consider a number of factors. These include:

1. The tax break you can reasonably expect to receive when you lease restaurant equipment.

2. The payment options available to you from the restaurant equipment leasing company you choose.

3. Whether to lease restaurant equipment with the intention of eventually owning it or of returning it at the end of the lease period.

Action Steps
The best contacts and resources to help you get it done

Compare interest rates offered by companies that lease restaurant equipment

As you look at various leasing options available to you, you can make a better decision if you have a thorough understanding of how restaurant equipment financing and leasing work. Restaurant equipment leasing and financing is much like getting a loan from a bank. The better your credit and longer you've been in business, the lower your interest rate will be.

I recommend: Lease International provides restaurant equipment financing. It has a nifty calculator that helps you estimate the cost of a lease based on its size and duration. Equipment Leasing Quotes is an online service that helps you compare restaurant equipment lease options, so you can find the best interest rate for your company.

Shop around for the biggest restaurant equipment lease you can get

As you shop around for restaurant equipment, you'll notice that restaurants that have been in business for two years or more are favored with higher credit limits. A start-up may only be eligible to lease half the equipment an established business could get, if it's eligible at all. This is because a vast majority of restaurants fail within a year. If you're just starting out, you may need to be selective about the items you lease. It's no good taking out a four year lease on an oven range if you might go under in six months.

I recommend: Central Restaurant Products lets start-ups lease restaurant equipment with no money up front and a $10,000 maximum limit with its lease-to-own program. Pinnacle Financing offers restaurant equipment leasing; start-ups are eligible to lease up to $30,000, while businesses that have lasted a year can lease $35,000. Once a company reaches the two year mark, it can lease $75,000.

Make smart choices when considering restaurant equipment for lease

Leasing certain supplies and pieces of restaurant equipment will actually save you money over the long haul, because many leasing companies service and replace equipment as needed. For finicky equipment, shelling out a monthly fee may be far preferable to dealing with repairs. You should also see if the leasing company provides delivery and installation. Many do, and you should figure in the cost of these services when considering whether to lease or buy.

I recommend: Dummies.com makes specific leasing recommendations: ice machines, dish machines and linens are all excellent candidates. Tiger finances everything your business needs to get restaurant equipment up and running; it even figures in the cost of training materials. ELease notes that its restaurant financing program makes it easy to purchase upgrades.

Many leasing companies earn a profit by offering restaurant equipment, leasing supplies and equipment. Beginning a restaurant is a major financial undertaking. Rather than purchasing all equipment and supplies upfront, many entrepreneurs choose to lease restaurant equipment. For this reason, leasing companies are increasingly popular. Leasing companies often offer all major and minor types of equipment for restaurants. Some leasing companies specialize in one industry, while others offer equipment in other industries as well.

In addition to the actual equipment and supplies used for leasing, leasing companies must also make use of supplies that are more abstract and less physical. Leasing calculators, leasing finance companies, and lease agreements and contracts are all valuable tools and supplies for restaurant equipment leasing companies. As you're looking into the restaurant equipment leasing supplies and equipment you will need for a successful leasing business, consider the following:

1. Lease agreements and contracts ensure that both the lessor and the lessee receive fair treatment when leasing restaurant equipment.

2. Leasing calculators allow customers an opportunity to estimate the amount of money needed for lease payments.

3. Equipment lease and finance organizations serve as valuable tools of information for restaurant equipment leasing.

Action Steps
The best contacts and resources to help you get it done

Create a restaurant equipment lease agreement to protect your business

One very important aspect of restaurant equipment leasing is a lease agreement, the contract between the lease company and the customer. General lease agreements list the type of equipment leased, the duration of the lease, and the amount of payment made by the customer. This agreement also details the actions take if the customer fails to pay or if the equipment does not work.

I recommend: View the restaurant equipment leasing application from Central Restaurant for ideas. Also consider some of the terms in the lease-to-own special programs section. Search forms by state. Some states have different laws and regulations on leasing terms. Easy Lease Company designs lease agreements for restaurant equipment including pizza ovens, grills, sinks and faucets, and drink machines.

Offer a restaurant equipment leasing calculator link on your website

Leasing calculators are a valuable supply for leasing companies because they allow potential customers the opportunity to estimate the amount of each payment. Based on the payment, the customer determines whether he or she will be able to afford to lease the equipment. Customers may independently carry out this calculation. Therefore, the leasing company is only contacted with serious inquiries.

I recommend: ELB Tools offers an equipment leasing calculator to calculate lease payments for restaurant equipment. Simply enter the restaurant equipment leasing rates. Tiger Leasing has a leasing calculator that adjusts the amount of the payment based on the number of months of the lease and finance for your restaurant equipment.

Consider organizations as valuable tools for companies offering restaurant equipment for lease

Joining an organization specializing in your company or company's product is a good idea for any business. The restaurant leasing industry is no different. Several organizations exist that support and represent businesses offering restaurant equipment for lease and restaurant equipment financing. These organizations are a valuable piece of equipment for restaurant supply lessors. They offer education, tips, statistics, meetings, and more.

I recommend: The Equipment Leasing and Finance Association offers information for equipment lessors, including the restaurant industry. View the National Restaurant Association for upcoming trade shows, seminars, and meetings to introduce restaurant owners to your products and restaurant equipment leasing and restaurant equipment finance options.