What Are The Pros And Cons Of Leasing Restaurant Equipment?

People lease all kinds of equipment ranging from construction equipment, computer equipment and even restaurant equipment. What exactly are the pros and cons of leasing restaurant equipment?

leasing restaurant equipmentRestaurant equipment is very expensive and can put quite a strain on working capital. Leasing is a great way to acquire kitchen equipment without spending a lot of cash and improve your bottom line. Almost any type of restaurant equipment can be leased. The most popularly leased items include computer systems, coffee makers, ice machines and dishwashers. The best pieces of equipment to lease for your restaurant are the ones that depreciate, become obsolete after a few years or break down often.

Leasing Restaurant Equipment Pros

It Can Free-up Working Capital And Upfront Costs

If you do not have all the money to purchase new equipment or to do everything you need to do because you have limited cash flow, then leasing restaurant equipment might just help you free up your working capital.

When you are on a tight budget, you need to evaluate the things that you need and those that you do not. Sometimes you may need to make sacrifices on the purchases and this might tempt you to purchase low quality equipment. Low quality equipment has a tendency to break down easily and might even have additional features that you do not even need.

Leasing equipment gets you kitchen equipment that has high quality features that you need. This will help you run your business efficiently and you won’t have to spend a large amount of money.


Leasing restaurant equipment offers you some flexibility. For instance, you can choose to purchase the equipment at the end of the lease term, return it or simply extend your lease. This of course depends on the type of lease agreement that you get into.

Capital leases offer you the opportunity to purchase the equipment at the end of the lease term at $1. The monthly payments for this type of lease are high but this is because you will be financing your equipment 100%. If you want a lease that still gives you the option to purchase but has lower monthly payments, then you should choose the fair market value lease. The disadvantage of this type of lease is that you will have to pay a much higher price than you would have with a capital lease.

Other ways that leasing offers you flexibility is the fact that you can terminate your lease early if you close down your restaurant, you can upgrade your equipment when necessary and you can add more equipment. Ensure that you understand your lease agreement and that it contains favorable terms that offer you some degree of flexibility.

Leasing Restaurant Equipment Cons

When you sign a restaurant equipment lease, you are bound by the terms and conditions of the contract. So if you close your restaurant and you have no further use for the equipment, you will still have to pay for it.

The overall cost of leasing restaurant equipment can be higher than purchasing it. This often happens when you grossly miscalculate the actual amount that you would pay at the end of your lease term.

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How To Lease Restaurant Equipment

You should be prepared for a credit check. Leasing restaurant equipment requires the same credit checks as applying for a bank loan. If your credit is less than perfect, you can still be approved for a lease but you will receive a higher interest rate.

Read the fine print on your equipment lease. Find out how long the lease is for and if you can terminate it early. Many people get into unfavorable agreements simply because they do not read the fine print or they do not include a financial advisor or an attorney in the leasing process.

Compare the costs of leasing new and used restaurant equipment. You may save on costs by leasing used kitchen equipment that is still in good condition.

Shop for the best restaurant equipment leasing rates. Many companies lease restaurant equipment so it is possible for you to get the best rates in such a competitive industry. Along with the best rates, find out what services the leasing company provides. For instance, will they install it, repair and maintain it, upgrade it, etc.

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