If you’re serious about opening a new restaurant, you likely already know that acquiring the right kitchen equipment will be paramount to the success of your endeavor. At the same time, you’re also no doubt aware that buying commercial kitchen equipment requires a substantial outlay of funds -- money you’ll need to secure long before you can serve your first dinner.
Let’s first review some of the equipment your restaurant is going to need before going over the positives and negatives of buying these items new or used. Later we’ll explore a few practical kitchen equipment financing options available to aspiring Canadian restaurateurs.
As a general rule, purchasing older kitchen equipment will be the least expensive option in the near term, but used commercial kitchen items also stand to have a shorter shelf life and likely won’t come with any warranties.
That won’t be the case if you buy your equipment new, except doing so will obviously cost you a lot more money. And remember, purchasing new kitchen equipment is similar to buying a new car, meaning it radically depreciates the moment it’s been purchased and leaves the showroom.
For these reasons, often the wisest approach is to buy used kitchen equipment that’s only a few years old. Given restaurants are high risk businesses that sadly fail more often than succeed, there’s usually a considerable amount of this kind of inventory on the market.
Some items make more financial sense to buy new, whereas other pieces of commercial kitchen equipment can be purchased used -- with the only practical difference to you being the price.
Here’s a brief list of what equipment you should consider buying used.
- Ovens and ranges
These are great items to buy used as they typically enjoy long lifespans. Just make sure when doing your inspection that the oven and stove top heat evenly, the cooking surface is even, and all the seals are intact. So long as it meets this critera you should be in pretty good shape.
If you aren’t a seasoned cook yourself, bring your chef along to inspect the equipment as well, as he or she might be a better judge of its true condition.
Also, remember that gas equipment is almost always more durable than electric gear, breaking down far less often. Even when gas appliances do break down the parts are usually easily found and the repairs simple, rarely requiring specialized knowledge to fix. That said, bear in mind that on a day-to-day basis, gas appliances are more expensive to operate.
As with ovens and ranges, commercial fryers are also pretty durable items, so again it makes good financial sense to buy them used. Something to look for when inspecting a used fryer, however, is the oil container. Make sure it’s watertight, otherwise it will leak and be a constant nuisance.
Restaurant-grade tableware is typically designed to last, making it another smart second-hand buy. The only trick can be finding the appropriate tableware to match the theme of your restaurant. However, because of the wide availability of used commercial grade restaurant inventory, you stand an excellent chance of finding a design that’s suitable for your establishment.
- Small appliances
Blenders, pots, pans, and kitchen utensils are predictably durable items that often sell for a tiny fraction of what they cost new. Be sure to closely inspect any electrical small appliances you’re considering for purchase, as anything electronic will be more susceptible to wear and tear.
These days there are numerous places to buy used commercial kitchen equipment. Here are a few suggestions, along with their respective pros and cons.
- Local used equipment retail stores
Chances are there’s at least one of these retail stores in your vicinity. They buy, sell, and trade used restaurant equipment, and offer certain advantages over other purchasing options.
For example, you can fully inspect the equipment’s condition and better visualize how it will fit into your restaurant. Plus, you have access to the salespeople’s expertise with respect to the different styles and brands of equipment that interest you. The only major drawback is that the volume of equipment to choose from is usually a lot more limited than what you’ll find online.
- Online suppliers
The main advantage of purchasing your equipment from an online supplier is the wide variety of brands and prices available to you, a factor not to be underestimated. However, you won’t be able to inspect the equipment until it’s in your possession.
Also, shipping large items like restaurant-grade ovens is expensive, something you’ll need to factor into the final price of anything you choose to purchase online.
- Resale stores
Most resale stores either have a used section or sell used equipment exclusively. While these vendors may only have a limited selection, many of them verify, certify and guarantee their inventory, so you know won’t have to worry quite as much about purchasing damaged goods.
- Auction houses
Restaurants that have gone out of business and need to liquidate their assets quickly often use auction houses. There’s likely be at least one in your area and most now list their inventory online so you can review the items that interest you in advance.
Better, many auction houses inspect and evaluate the equipment on offer because they need to price it, which puts you in a better position so far as not purchasing damaged or defective items.
You have two main options so far as financing your restaurant’s equipment is concerned: you can either lease it or secure a loan to buy it outright. Both approaches have their pros and cons.
Benefits of loan financing:
- You may not need to prove sources of capital in order to qualify for this type of loan because the equipment itself functions as collateral, leaving you with more start-up money to invest in other areas of your business.
- In most jurisdictions there are tax advantages to purchasing kitchen equipment outright.
Cons of loan financing:
- Not all conventional lenders will finance used equipment.
- Traditional lenders often won’t finance new restaurants, preferring they be in business for as long as one year before providing funding. As such, you may need to appeal to an alternative business financing partner.
Benefits of leasing:
- Many leasing companies offer leases for used kitchen equipment.
- A predictable payment schedule that doesn’t require a large lump sum initial deposit frees up working capital that you can invest in other areas of your business.
- Equipment can easily be upgraded at the end of the lease.
- You typically have the option of buying the equipment at the end of the term.
Cons of leasing:
- Buying equipment builds equity whereas leasing does not.
It only makes sense that buying or leasing used kitchen equipment will lessen the financial burden of opening a new restaurant. However, should you err and find yourself saddled with inferior used equipment that’s constantly breaking down and needs to be replaced prematurely, it will cost you more over the long run.
It’s crucial to thoroughly research and inspect any commercial restaurant equipment you’re considering for purchase. If you play your cards right, acquiring the right balance of new and lightly used older restaurant equipment should bring you the most value and bang for your start-up buck.
Our experts can help you build an equipment leasing and financing program that fits your needs. Contact us to find out more.