How Much Does Restaurant Equipment Leasing Cost
Buying your own equipment for your newly opened restaurant can really be expensive. It will really cost you a lot especially if you have just started. Bigger investments will be needed. However, there is one way to lessen your restaurant equipment cost. That is to lease them. Today, restaurant equipment leasing is now a famous substitute for purchasing. It is really a smart choice for newly opened businesses. Also, after the term of the lease is over, you can completely purchase the equipment or trade it for a newer one. The first thing you should know is how much does leasing restaurant equipment cost?
Average Leasing Restaurant Equipment Cost
Leasing a restaurant equipment means you will have to pay a monthly fee throughout a period of a few years. The usual leasing period is around 3 up to 5 years. After that period or when the lease term expires, you can get a newer model of equipment by signing a new term or you can ask to buy the equipment instead.
Opening a restaurant can cost you around $100 thousand up to $300 thousand. This includes purchasing of kitchen equipment that can cost you around $30,000 up to $120,000. Which means kitchen equipment is the biggest cost you will have to make.
So to save money, leasing is the best option. Leasing restaurant equipment cost usually runs around $1,000 up to $5,000 monthly. And it depends on the size and the type of the kitchen equipment. Usually, a kitchen equipment that costs around $20,000 if purchased can cost you around $450 up to $500 per month for 5 years if leased. On the other hand, a full kitchen equipment that costs around $50,000 will be just $1,100 up to $1,200 per month for 5 years if leased.
Dishwashers, coffee makers, and ice machines are some equipment that usually doesn’t last long. And they are the usual equipment that is always leased. These machines have a leasing restaurant equipment cost of around $100 up to $400 monthly.
Aside from kitchen equipment, other supplies such as linens, uniforms, floor mats and much more can also be leased for a very small price.
Duration of Lease
Another factor that could affect the total leasing restaurant equipment cost is the duration or the length of time that you are going to lease the equipment. This should be factored out aside from the initial cost of the leased kitchen equipment.
Everybody knows that the longer you will lease that kitchen equipment, the more it will really cost you. You should always give time to think about this factor. You should make a plan on how long will you have to lease an equipment and when to purchase one. Knowing how long your restaurant will last is the best way to know when to stop leasing.
Advantages and Disadvantages of Leasing Restaurant Equipment
Now that you have an idea on how much does leasing restaurant equipment cost, you should also know what are its pros and cons in order for you to analyze if leasing really is good for you.
- Affordable Cost – Normally, the cost of buying a full kitchen equipment cost a lot and it can lessen the ROF (return on investment) of your restaurant. With kitchen equipment leasing, it will just require you a little amount of money. Sometimes, companies don’t even ask for a down payment.
- Less additional expenses – You will not have to worry about the additional expenses that you will have to make, especially for the maintenance and repairs needed for the equipment. Usually, the lease agreement or term already covers the cost of maintenance and repairs.
- New Equipment – When you purchase an equipment, you will have it forever as long as it works. On the other hand, leasing an equipment gives you an option to upgrade it to its newer models every few years.
- Rent-to-own – A lot of companies offer this kind of service to their customers. This service means that you can arrange to buy the equipment you leased with the payments that you have made. This is the best option if you want to keep the equipment for the rest of your business years, especially if you can afford to buy it directly.
- Total Cost – As what we have mentioned above, the longer you lease the equipment, the more it will cost you instead. So as a conclusion, leasing restaurant equipment cost is much expensive than purchasing one in the long run.
- Terms and Agreement – You will have to follow all the conditions that are written when you sign the lease. This means that you will have to pay the monthly fee even if you already stop using the equipment or if your restaurant closes.
- Interest Rates – This is one major disadvantage of leasing an equipment. Some companies even charge high-interest rates over time.
- Early Closure Fee – Oftentimes, you will have to pay an early termination fee if you find that you don’t need to use the equipment anymore even before the term expires.
Equipment Finance Advisor provides you tips on how to find the best restaurant equipment lease. On the other hand, Smarter Finance USA provides a list on how to avoid fraud restaurant equipment leasing.
Buying Restaurant Equipment
Because you will eventually have to buy restaurant equipment, since leasing one can be very expensive in the long run, you should also know what are the advantages and disadvantages of buying full restaurant equipment. Try to compare its pros and cons.
Cheaper in the long run – This is the exact opposite of leasing a restaurant equipment. If you think that your business will last a lifetime, then buying a restaurant equipment is the best option.
Less worry – One advantage of having your own equipment is not worrying about the monthly fee you are going to pay.
High initial cost – Still the exact opposite of leasing one. And everybody knows that a full restaurant equipment is very expensive.
Old models – As long as your equipment is working, you will not have to upgrade it, unless if you have enough money to buy a new one.