The Benefits of Equipment Leasing are Numerous
For a restaurant owner, kitchen equipment is the single most important investment he or she will make. Restaurant equipment must be of the highest quality, durable enough to withstand heavy use while reliably serving up perfectly made meals. Dishwashers, ranges, refrigerators, steamers, fryers, warming ovens, grills and a whole lot more have to be calculated into the cost of running a restaurant. Unless there is an investor with very, very deep pockets, it’s likely that someone starting up or expanding a restaurant will need to consider financing. While there are other options, the benefits of equipment leasing are numerous.
How Does it Work?
First of all, the restaurant owner, or client, sources the best equipment for the business. An excellent resource and buyer’s guide can be found at the Restaurants Canada website. The finance company buys the equipment, then leases it to the client. There is no limit to what kind of kitchen equipment can be leased. Other items that could be leased as part of a package are:
- tables and chairs
- sound systems
- signage
The equipment can come from a variety of vendors but should be included as part of one lease. The rates of the lease are based on the calculated risk and the length of terms, usually lasting two to five years.
Why Lease?
Leasing offers flexibility at affordable rates. The borrowing costs are low and less money is due upon signing. At the end of the lease, there can be an option to buy the equipment for often extremely reasonable rates. Some companies offer the option to trade-up during the lease, with easily negotiated new terms that calculate the trade-in value of the equipment and the difference in costs.
Where to Look for a Restaurant Equipment Lease
There are financial service firms that offer a variety of options that can be customized to the client’s needs. While there are many institutions that are accustomed to working with small businesses, there is only one or two that actually cater to the restaurant business. Econolease is a finance company that focuses solely on the food and hospitality business, servicing restaurants, cafés, catering businesses, food trucks, bed and breakfasts: essentially any business with a professional kitchen. Econolease is a member of the Canadian Franchise Association.
Besides leasing, renting is also a possible option, especially if the desired equipment is not familiar or fully tested in a restaurant setting. Renting can cost more, but have shorter terms. End of term options can involve continuing to rent, returning the equipment, or converting to a leasing agreement.
Where to Start
The benefits of equipment leasing can be realised when starting up a new venture, expanding an existing one or when equipment simply needs to be updated. Begin by costing and researching the equipment. Make a solid business plan. A restaurant and catering start-up checklist can be found on the Government of Canada Business Network website. Then speak to a financial service company, preferably one that specializes in working with the food industry. There are lots of options out there, so find one that works perfectly for you.