When comparing leasing vs buying restaurant equipment, which is the better choice for your company over time?
Restaurants are some of the most effective businesses around, giving people an enjoyable atmosphere to eat a delicious meal. Many restaurants have their own niche, whether it’s the comfortable diner feel or a family environment or a specific dish that people love.
Whatever your restaurant offers, business owners easily have the ability to make a good living and a successful business using good business management skills and the right setup. From the employees you hire to the equipment you get and the location you pick out and furnish, your business requires quite a few factors to be successful and it all ties back into your finances.
Having enough money to afford everything can be difficult, especially some of the more expensive yet necessary requirements like getting all of the restaurant equipment you need. From purchasing all the ovens and hot hold units and refrigerating units and all of the utensils that go with, everything you need for your business to succeed can be fairly expensive.
When your restaurant is just starting and already dealing with so many expenses, paying for that equipment can be difficult and you really need to weight your options. You can purchase your equipment, but that’s only if you have the funds and generally that means you take out a bank loan.
You can also take out an equipment lease on the equipment, allowing you to pay a monthly rate to get the equipment loaned to you. In the case of leasing vs buying restaurant equipment, which can provide your restaurant with long term success while saving you quite a bit of money.
Purchasing Equipment for a Restaurant
Purchasing for your restaurant always depends on what the equipment is you are purchasing; it’s much different to purchase pans and utensils versus purchasing ovens and microwaves. This difference is called capital equipment, which is essentially expensive equipment business owners need to purchase.
Business owners need a good way to get all of the equipment they need for their company, expensive and inexpensive both, and there are different ways to get all of this equipment. For instance, if you purchase your hardware you’ll inevitably end up having to repair or replace it once it begins to deteriorate.
The advantage to purchasing more inexpensive equipment is not only is it easy to buy and lasts a long time, but replacement is also as simple as another small purchase. When dealing with capital equipment, maintenance errors are much more common and paying to replace that equipment can be tough for a business to pull off.
Purchasing can be even tougher with a bank loan considering the fact that the interest you have to pay completely depends on the hardware you are purchasing. The interest rate is a percentage of the amount you are loaning, so if you get capital equipment that interest rate can increase your debt quite a bit.
Plus, what if you buy equipment with a loan and can’t pay it off for a while? The equipment could end up needing to be replaced, meaning you have a growing loan and still need to pay to replace that hardware.
Leasing vs Buying Restaurant Equipment
Unlike a purchase, you don’t have to deal with large up-front payments with equipment leases, making life much easier for you. With equipment leases, you pay a low flat monthly rate and get all of the equipment at your disposal for the pre-determined contract period.
You also don’t have to deal with interest; the rate you pay is the same throughout the entire lease. When looking at leasing vs buying restaurant equipment, most believe the main advantage to be how easy it is to afford a lease versus purchasing your capital equipment.
Plus, equipment leases allow you the ability to get equipment repaired over time without having to pay to replace the hardware. Leasing also means you get tax benefits, essentially putting money in your pocket every year.
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