Few chefs would deny the importance of good catering equipment. But quality has its price, and a kitchen full of high-performing gear can be very expensive in capital outlay. But the second-hand route often means buying equipment which somebody else has discarded - and not many chefs throw out kit that's still working.
The main alternative to capital outlay is some form of leasing, and there are several options to choose from. The thought of paying endlessly for equipment the kitchen will never own may seem poor business management, but an increasing number of chefs are turning to equipment leasing.
The most obvious advantage, particularly for a start-up business, is that it spreads the cost, so allowing the budget to be used for goods and services where capital outlay is the only choice, such as decor or wages.
Another plus is that leasing has flexibility that outright purchase doesn't. If the business expands, or if the wrong size of equipment was chosen, it's possible to change or upgrade. Alternatively, better equipment can be specified in the first place rather than going for a cheaper option because it was all the budget would allow. It will also help in budgetary forecasting to know that a set amount of money will flow out of the business on a set day of the month.
So with all these advantages, why doesn't everyone lease instead of buying? The drawback is that although it may prevent a high one-off capital cost on an item of equipment, there's usually a deposit to pay, servicing costs may still fall to the kitchen, and by the time the leased equipment is handed back the whole life cost will have been more than initial outright purchase.
The amount of extra cost over the whole life will depend on the agreement and how long the equipment lasts, but it's certain to be more than what it would have cost in loan charges had the purchase cost been funded by a bank loan. Don't be surprised if leasing adds a third to the whole life cost, though some deals are much better than that.
Some manufacturers have their own leasing schemes, while some factor out to specialist leasing companies. Whichever the funding route, either the equipment distributor or manufacturer is the first line of enquiry.
Types of leasing
There are two main types of leasing agreement. Lease rental is where the equipment remains the property of the leasing company, while lease purchase means that after the leasing period is up, the equipment becomes the property of the restaurant. There are shades in between these types of agreement, but those are the two main ones.
Some equipment companies prefer lease purchase deals because it removes the need for disposal by the leasing company, either through the second-hand market or through recycling, which costs money.
Even where equipment has been on lease rental, there may still be an opportunity to purchase the equipment from the leasing company at a knockdown price at the end of the lease.
There are sometimes sweeteners in a leasing deal, such as free installation, more attractive or free servicing contracts, or free consumables such as detergents for a dishwasher. But in reality, everything "free" will be costed into the lease price.