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Buying vs. Leasing Your Restaurant Equipment ... Which Makes Sense ?

By Amy Nichol Smith
Business.com / Finance / Last Modified: July 19, 2017
Image from mashurov/Shutterstock

Buying commercial equipment may be more cost-effective, but leasing is a flexible option if you can't afford to spend thousands upfront.

As you draw up your business plan for your restaurant, you must decide whether you want to buy or lease restaurant equipment. There are benefits for either option, so you should consider the pros and cons of each and how they will affect your bottom line. You take different steps for each process, so read through our guide on how to find the equipment you need, whether you buy or lease.

Buying Restaurant Equipment

Purchasing brand-new restaurant equipment is the easiest method of all. After you do research on brands and prices, you can buy your pieces directly from a manufacturer or choose to work with a supplier.

The benefit of buying from the manufacturer is that you don't have to pay any overhead expenses. However, you may need to arrange for deliveries yourself, and you may need to hire someone to help set up all the equipment. A supplier could be a cost-effective solution if you can get deliveries and setup included with the price. Either way, new restaurant equipment typically comes with long warranties that help protect your equipment should anything go wrong. These warranties – which can range from 5-10 years to lifetime – ensure that you can return a piece of equipment for repairs at no cost to you.

The only negative to purchasing new equipment is that you're going to spend more money. A new gas range is likely to set you back at least $2,000, and that's just one piece. A fryer could cost $1,000. Most commercial kitchens with all-new equipment cost $30,000 minimum. If your budget is flexible enough for you to spend more money upfront, it can be a better choice than leasing.

Leasing Restaurant Equipment

When you lease commercial restaurant equipment, you need to find a reputable supplier. Ask all of the pertinent questions about the equipment you're leasing: How old is each piece? Are warranties included? Have there been repairs? Is the supplier contractually obligated to handle repairs?

A lease costs you less upfront, so you can get your kitchen up and running without a major dent in your budget. Many leasing companies also allow you to exchange your equipment at the end of your lease for the latest or different models, so be sure to check your leasing contract for these options.

Over the long term, leasing is likely to cost you more than buying new equipment. You pay a monthly fee for your equipment, which may be easier for you to manage, but it also typically includes fees and interest. Also, at the end of your lease agreement, your restaurant equipment doesn't belong to you, so you cannot keep it or sell it as you see fit. Instead, you must enter a new lease agreement to continue renting the equipment or newer kitchen pieces.

Whether you buy or rent your commercial kitchen equipment, you need to decide which option is better for you and your restaurant's future. Write the upfront or monthly costs into your business plan, and consider repair costs versus a warranty that can cover repairs.

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