If you are short on finances or money, leasing restaurant equipment or renting restaurant equipment from a local restaurant supplier is an option that you have. Many restaurant owners do not have the sufficient funds to pay for expensive restaurant equipment, so you can either buy used restaurant equipment or see what type of lease agreements you can come up with from restaurant supply companies.
Renting restaurant equipment and leasing restaurant furniture is very similar to renting televisions or stereo equipment for your home or party. There are many rent to own or lease to own programs from restaurant equipment suppliers where you can pay monthly payments and eventually own whatever equipment you purchase for your restaurant. An equipment lease will have terms and conditions you must adhere to and follow. There are many pros and cons to renting or leasing restaurant equipment for your business.
What To Do As A Restaurant Owner Who Is Short On Money?
You can either trade in or sell any restaurant equipment you currently have to get capital towards new equipment. The most common types of equipment that people will purchase include;
- commercial refrigeration and freezer units
- gas or electric stoves
- gas or electric convection ovens
- Hood or exhaust systems
- other types of kitchen equipment and cooking equipment
Many restaurant suppliers offer in-house financing that restaurant owners can take advantage of. Equipment leasing can be a great asset to a restaurant owner if done correctly. In your agreement with the restaurant supplier, you should be able to negotiate the use of equipment on monthly terms. There are universal and central restaurant products that will be stocked at many warehouses in showrooms you can choose from. Going to a conventional bank to try and borrow money to buy a restaurant equipment will probably not work.
Lease and Rental Payments From Restaurant Suppliers
You will have a leasing agreement and steady monthly lease payments you must make in order for your equipment you are renting not to get repossessed. Most suppliers will give reconditioned equipment for your kitchen and will also take care of any repairs necessary while you lease the equipment. If you rent to own, many times you’ll have to pay extra to have the kitchen equipment serviced from the same company, thus leaving it in the restaurant owners responsibility to fix any broken equipment.
You will be required to sign and accept the terms and conditions of the lease agreement set forth by the rental company you get restaurant supplies and equipment from.
Pros Of Restaurant Equipment Leasing and Supply Rental
Expect to pay anywhere between 4% all the way up to 12% interest on any commercial cooking equipment you decide to purchase. The good thing about in-house financing many restaurant supply companies offer you can negotiate terms and conditions. If you need three months to get your business going, many times this can be worked into a leasing or rental agreement. The pros to renting restaurant equipment is that you are not responsible for fixing any of the equipment, which can save lots of money, especially if you are tight on cash.
Another great convenience that is available for restaurant owners lease equipment is tax deductions. Your loan payments can be tax deductible since they are a business expense and you are getting an advance loan on money.
Another great resource is that you will be given a catalog of many different listings and rentals you can choose from. Information will be available on the different types of equipment and manufacturers they are made from at your fingertips. Getting credit instead of buying restaurant equipment at an auction can be a blessing for many owners.
Cons Of Rental Restaurant Equipment
The cons of leasing or renting restaurant equipment is that you are paying money each month and never owning your own items and inventory. Buying equipment will require lots of upfront capital, a moving truck, and possibly a loan from advanced restaurant equipment or some other financial source.
You are not going to get any sale prices or discount prices on restaurant equipment if you decide to lease. The company selling used restaurant equipment to do restaurant owners make their money by buying and selling equipment and the only way to do so is to increase the price by usually a minimum of 25%. Many times, a lot of these equipment rentals have already gone through a minimum of two or three reconditioning processes to get the food service equipment working again.