Restaurant Equipment Leasing Key Terms

Learn restaurant equipment leasing terms before signing on the dotted line

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.

 

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.
Try: 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.
Try: 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.
Try: 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.
Try: 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.
Try: 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.
Try: Arco describes their preventative maintenance contracts.

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