choice consquence

Leasing vs Buying: What Next?

06 June 2017

Growth and expansion is great and congratulations on your hard work in achieving your milestones! So what’s next?  Success is sweet but it also brings with it a number of hard decisions related to your operation and particularly your foodservice equipment.

Commercial foodservice equipment can save you money in both the short and long term if you make the right choice, but making the right choice is tricky when there are so many considerations.  So what investment is the right one for you?  We recommend you start by weighing up your own requirements against the equipment options available as follows:

Your Requirements

-Your Menu: what sort of equipment do you require to execute your menu? Can more advanced equipment options take care of menu items such as beverages, grilled items, ice creams, iced tea or whole menu lines such as broasted chicken?

-Your Teams: can your team operate new equipment? What training will be required? Will new equipment reduce your labor costs through new technologies?

-Your Kitchen: how big is your kitchen? Does the kitchen need to be re-organized? Does this present you with a good opportunity to re-plan the layout for maximum effect?  Are you at full capacity?   What can you do to change the kitchen’s capacity with new equipment?

-Your Budget: what is your available capital to invest? Are you depending on cash flow? What is the pay-pack period that you want to achieve?

 

Available Options

Rather than looking at re-purposed equipment, we recommend you consider either leasing or buying new equipment; the pay-back period on new equipment might be shorter than you think.  We have considered some of the main factors that will affect your choice, but before making any decision, call a DSL Northwest expert for a free consultation on 877-665-1125.

 

Leasing?

Advantages to leasing include conserving working capital, flexible payment plans, and tax advantages as well as:

  • Added credit availability.
  • Bank credit lines are not affected which allows bank borrowing capacity for other needs.
  • Conserves working capital financing.
  • Equipment leasing can finance 100% of the equipment cost, leaving precious working capital for other needs while facilitating cash flow.
  • Equipment leasing allows the equipment to be paid for from income that is generated from its use.
  • In many cases, equipment lease payments can be treated as a fully tax deductible expense.  (You should consult your CPA for your specific use.)
  • The whole equipment leasing process is usually faster, simpler, and often less costly than other financing alternatives.

Buying?

  • Factor in the equipment lifespan, on-going operational and running costs and any on-going maintenance and servicing to create a planned budget in line with your own finances.
  • If you are considering second-hand equipment, and the item costs more than 50% of the price of a new one, consider looking at buying new.
  • Buyer Beware… while pricing on the internet on used equipment can be enticing, be aware that you have no history on the equipment, service records or usage history. How long has the unit been out of service? How was it stored? What type of refrigerants does it use? Will the seller warranty the used equipment?
  • Warranty – Ask about the warranty that is available on the equipment to ensure that you save money and time over the life of the plan.
  • On-going servicing – this is an essential part of any purchase. You need local, trusted and knowledgeable technicians who can respond to issues quickly while also planning a regular service schedule to avoid costly and damaging downtimes.
  • Correct equipment for the job – speak with an authorized sales representative when looking at new restaurant equipment to make sure that your investment is appropriate for your projected business volume. If the equipment isn’t large enough you will create bottlenecks in your operations, too large for your projected volume and you have unnecessarily invested capital that could be deployed in other areas of your business.

 

Next Steps

As the exclusive distributors for equipment and branded programs in our region for Taylor freezers, Broaster branded products,  Flavor Burst and Fusion Frozen Tea, DSL Northwest is experienced in helping restaurants and operators to optimize their menu through sensible and cost-effective planning, buying decisions, equipment and servicing options. For the past ten years we have worked with hundreds of international and local brands across the Pacific Northwest including McDonald’s, Wendy’s, MOD Pizza, Burger King, The Matador, Burgerville, Muckleshoot Casino, Top Pot Donuts, Dutch Bros, Costco and Ethan Stowell Restaurants.

As well as equipment selection, the DSL Northwest team provides parts support and free trouble-shooting.  Reassuringly, we are there 24/7 365 days a year for service call-outs. Familiarize yourself with our approach and equipment on www.dsl-nw.com, and call us for a free consultation on 877-665-1125 with a DSL Northwest expert.  We can help you to navigate the many choices available in order to reach the decision that is best for you.