10 Reasons Why You Should Lease New Restaurant Equipment vs Buy

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10 Reasons Why You Should Lease New Restaurant Equipment vs Buy

Taking the plunge in starting your own restaurant business is a huge investment of your time and your money even for the most experienced restaurant owners. Aside from the need to have awesome culinary skills, you must also be business savvy to be able to wisely invest your money on the right things. Remember, making a name for yourself in this field could be challenging and you will need to be practical in all your decisions.

I usual I have a story about when I started my first restaurant. I started my first restaurant with very little capital saved up and I didn’t have collateral to loan against. I had to be extremely careful with my money. I took over a failing pizza business. I kept my teaching job to make sure I had money coming in and if I needed to I could go running back to it.

I didn’t buy my equipment brand new like I said in the previous paragraph I took over an already open restaurant. I bought all the equipment on land contract. I bought the equipment from the owner of the building who at one time operated a restaurant out of the space. I negotiated no interested and small monthly payments over 5 years. I really freed up my money to put towards other things like marketing. I needed to get my name out there and let the community know I was a new owner. I couldn’t afford to change the name on the building like what is suggest to do in all the research I did prior to opening my restaurant. It might not work for everyone but it worked for me.

You may find this article interesting as well : 6 Restaurant Marketing Ideas

One of the most widely discussed concerns among those opening a new restaurant is whether they should buy or lease their restaurant equipment. While both have their benefits, most new restaurant owners can not afford to buy brand new restaurant equipment when they are just starting off. Here are several reasons why you should consider this option over buying brand new restaurant equipment. 

10 Benefits to Leasing your Restaurant Equipment

1. Lower upfront costs

When you lease your restaurant equipment, you do not need to shell out a huge amount of cash. This especially applies to large commercial equipment in the kitchen that could cost you an entire year’s rent and an employee’s salary. Since your restaurant is new, it would be more practical and prudent to lease first before making any major purchases.

2. Make your leased restaurant equipment a tax deductible

The payments you make on your restaurant equipment some times can be considered as tax deductible when doing your taxes. Check with an accountant to be sure though. The payments are some times categorized as business operating expenses. Since most leasing contracts require monthly payments, this means that you as a lessee also pay your taxes every month. Most of the time, these deductibles eventually cancel out the overall expenses you shelled out for the restaurant equipment. If you decided to buy the equipment instead of leasing it you would have to pay the tax on it right away.

3. Upgrades/updates may come easier

When you lease restaurant equipment, you and the lessor set a designated period for the contract to expire. Given the set amount of time you will be using the items, you would be able to determine if this leased restaurant equipment is working well in your kitchen. If not, it may be easier to get a different brand or model that will work better in your kitchen. With more experience you will have a better understanding of what you need as well.

Apart from being able to switch your equipment to something you feel would be more useful to your restaurant, leasing also allows you to conveniently upgrade to the newest model. Simply opt for the upgraded or updated version of the restaurant equipment of your choice, and you’re all set to have the latest and greatest model.

4. No buyer’s remorse

When you lease your restaurant equipment, you only have the item within the specified period in your contract. Some restaurant owners tend to overspend when equipping their establishments that they end up with things they have no use for and are actually pointless to own. Since you have yet to figure out the demands from your restaurant, opting to lease certain items is the ideal way to discover which of them actually boost your kitchen’s performance. Meanwhile, if you bought the equipment right away you could lead to regret it later on if it turns out that the item won’t help you in any way or is only useful for a handful of tasks. 

5. No headaches from repairs and damage

No equipment, regardless of how modern or expensive, can function flawlessly forever. This means that every item will eventually break or get damaged. Leasing restaurant equipment gets rid of the problems brought by these issues. In some restaurant equipment leases it states that you are not responsible for broken or damaged equipment. The maintenance of these items rests on the shoulders of the lessor, so you can just sit back and relax while you wait for the equipment to be fixed or replaced.

6. More money for other investments

Since you saved on the costs of your restaurant equipment, you might have enough cash to venture into ways to improve your business. Check out the flow of your daily income and look for areas where you can expand and develop new things. Leasing equipment gives you more freedom to explore options to improve instead of constantly worrying over your bank account. 

7. Money saved for rainy days

Let’s face it. Not all days in your restaurant will be a resounding success. There will be some days that aren’t as good as others. The money you tucked away because you opted to lease restaurant equipment could serve as your safety net when things are not going your way. 

8. Better chances at getting loans

It is generally understood that loans used for leasing restaurant equipment are easier to get approved compared with those for purchasing the expensive item. What’s more is that the terms of these arrangements are usually more flexible. This aspect could serve as a huge advantage especially for a business owner who has yet to establish their credit of line.

9. Possible Freebies

Some companies allow businesses to use their equipment free of charge. This is typically offered when the establishment is known to already be regular consumers of the companies products. That is, you can use their equipment for free if you have been using their products of your lessor. Here are a few examples

  • Coke or Pepsi fountain machines
  • Coke or Pepsi coolers
  • Ice Makers
  • Dish washers
  • Nacho Meat & Cheese warmers
  • Coffee Machines

10. Rent-to-own option

Some leasing companies offer rent-to-own terms to their clients. This can be an attractive deal to businesses since they won’t need to pay too much right away. At the same time, they could become the owners of the restaurant equipment they have already tried and tested in their kitchen. This option is ideal for items that you have identified as mainstays in your establishment. Some times they add a dollar buyout at the end of the term for products like these.

 I hope this article helps you make an informed decision whether you want to lease or buy your restaurant equipment. 


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