When you’re buying restaurant equipment, your budget is top of mind. Your challenge is to buy or lease high-quality equipment without breaking the bank. A challenge, indeed.
Buying restaurant equipment is an art and a science: there are certain things you can buy used versus new, you’ll have your must-haves and your nice-to-haves, and there are several ways you can get financing for the whole lot.
You’ll walk away from this section knowing:
How to determine your equipment needs
Which pieces of equipment to buy new versus used
The pros and cons of buying and leasing restaurant equipment
Restaurant equipment financing
Where to buy and lease restaurant equipment
If you’re just looking for a checklist, look no further: here’s your buying restaurant equipment checklist for all your restaurant needs. If you need a little more guidance, however, read on to know exactly how to navigate the vast world of acquiring restaurant equipment.
How to Determine Your Equipment Needs
The term “restaurant equipment” covers everything from big kitchen items like an oven to smallwares like the cutting board behind the bar. Before you start buying equipment, you’ll need to determine the items you need – every single item.
We recommend involving your chef in this process. Your chef will be the one working with the equipment, after all – and they’ll have expertise to determine the tools they’ll need for every step. Run through mock scenarios, like a busy dinner service, with your head chef to determine if there are any tools that could make their job more efficient on a busy night.
Note that this list should be living and breathing. You’ll likely need to buy more equipment once you’re up and running and identify holes in your processes. That’s okay!
Here’s a step-by-step process for determining your restaurant equipment needs.
Start with a spreadsheet.
Open your favorite spreadsheet tool and crack open a drink or whatever you need to get you through some detailed work.
Copy over every item on your menu.
Your menu is what will determine your equipment list, and your recipes are the best place to start. Just as you did for your inventory master list, go through every recipe and, instead of listing each ingredient, you’ll list each tool you need to complete each recipe.
Listing your equipment items beside your menu items.
For each item on your menu, list out every piece of equipment you need to create the dish.
Be sure to include:
Smallwares: pots, pans, knives, strainers, graters, measuring cups, etc.
Cooking equipment: fryers, stoves, food processors, etc.
Refrigeration: freezer, fridge
Your spreadsheet will look something like this:
Spaghetti and Meatballs
Spaghetti and Meatballs
Spaghetti and Meatballs
Spaghetti and Meatballs
Spaghetti and Meatballs
Repeat this process for every menu item/recipe.
Sort the spreadsheet alphabetically.
You’ll notice there are many duplicate items.
Remove the duplicates.
Behold your list of kitchen equipment.
Repeat the process for your front of house.
Once you’ve covered your back-of-house needs, you’ll need to determine the equipment you’ll need to serve those menu items. Your list for buying restaurant equipment will include things like main plates, salad forks, coffee spoons, etc. Be mindful of specialty equipment needs like garlic towers for the king crab, side serving dishes for soy sauce, or espresso cups for espresso.
Repeat the process for your bar.
Evaluate your cocktail menu, wine list, beers on tap, and the spirits on your liquor rail. Capture everything from the cutting board for slicing lemons to the snifters you need to serve brandy.
pro tip: you can sort your final lists further into “nice-to-haves” and “must-haves.” these lists will keep you frugal as you make your purchasing decisions.
Buying New vs. Buying Used Restaurant Equipment
Full stop, restaurant equipment is pricey. Costs compound quickly. To help allay costs and contain your start-up operating capital, you have the option to buy some equipment used instead of new – but you need to be strategic about it.
Here are some of the pros and cons of buying restaurant equipment, and which items to buy used versus new if you are going to go down both roads.
Buying Used Equipment
Low cost: Costly equipment like stoves and ovens depreciate in value as soon as they’re out of the kitchen showroom – so it’s easy to find a steal on big ticket items. And if you choose to buy from an independent seller, you can negotiate prices or get other kitchen items for free.
Easy to find gently used equipment: Since many restaurants don’t make it beyond their first couple of years, it’s relatively easy to find gently used equipment for a low cost. Many official second-hand dealers provide certifications that show they have inspected the equipment for safety and repair (also known as “certified used”). If you’re speaking with independent sellers who don’t offer certifications, inspect the equipment, ask to test it, and look for signs of irreparable damage. Ask the seller how they purchased the equipment and whether it’s still under warranty.
Warranties may still apply: It’s possible to find used restaurant equipment that is still under warranty. When equipment is under warranty, the manufacturer is still responsible for the cost of the repair no matter the current owner.
pro tip: while buying used equipment is a great way to alleviate financial burdens, you should always purchase used equipment with caution. do some research about the seller, their restaurant, how long they were in business before you make a final buying decision.
Expired warranty: You’re on your own. If equipment breaks, you’ll be responsible for the cost of damages.
Unforeseen damages: A short-circuiting oven or malfunctioning freezer could end up costing more in repairs and replacements than the equipment is worth.
Minimal selection and scarcity: While the vast world of online shopping adds a bit of diversity, you may find it’s slim pickings for quality equipment. When buying used, you might have to sacrifice some functionality or the brand you desire for the sake of a deal.
Equipment to buy used
Not all used equipment is created equal. Some pieces of restaurant equipment are fine to purchase used, whereas others might give you trouble in the future.
When purchasing second-hand equipment, always use extra caution, ask questions, and, if possible, test the equipment before buying it. You don’t want to be forced to buy it twice!
Here’s what you can consider buying restaurant equipment used and what to look for when you are.
Gas equipment: When electric equipment breaks, it’s harder to fix because replacement pieces are scarce. Gas equipment, on the other hand, is easy to repair and parts are easy to find. Gas equipment also tends to break down less often. That said, while the cost to maintain gas equipment may be less, its day-to-day operational costs are higher than electric equipment.
Ovens and ranges: Ovens and ranges are ideal candidates for resale because they have a long lifespan. When testing an oven or range, check that the oven and stove top are heating evenly and accurately. The cooking surface should be level, and the oven seals should remain in tact. If you’re unsure, bring a professional chef with you to vet the oven’s viability.
Fryers: Like ovens and ranges, gas fryers have a long lifespan, which make them great candidates for second-hand purchasing. When you’re evaluating a fry, check the oil container to make sure it’s still watertight, as any splits can leak oil. But don’t fret too much about the baskets: they’re easy to find and cheap to replace.
Small appliances: You may be able to find high-quality used pots, pans, knives, kitchen utensils, blenders, and food processors. While knives and blades are easily sharpened, you’ll need to test any equipment with a motor to make sure it’s working. Second-hand vendors often offer small appliances in bundles, and many vendors will guarantee the working order of your appliances for a specific duration of time.
Tableware: Since restaurant-grade dishes and glasses are meant for frequent use, they’re safe to buy used. You can buy used table settings like glasses, dishes, salt and pepper shakers, and condiment baskets without much risk. You may, however, run into issues with selection, especially if you’re concerned with aesthetics.
Buying New Equipment
We encourage the budget-conscious restaurateur to look at used options, but the general rule is “if you can afford to buy new, do.” When it comes to buying new equipment, here are the pros and cons.
Warranty: With new equipment you receive a warranty, which covers certain repairs for a duration of time.
Full lifecycle of equipment: Since you’ve purchased the equipment new, it’s unlikely that you’ll have to endure costly repairs early on.
Equipment history: You know what your equipment has been through, and that the equipment is up to health codes without additional inspection.
Expensive: Full stop: new equipment is costly.
Depreciates in value: As soon as equipment is out of its packaging, its value depreciates. If you were to re-sell it later, don’t expect to make your money back.
Equipment to buy new
When you’re dealing with a thin start up budget, you’ll have to prioritize what equipment you buy new, or else you’ll find that budget gets quickly swallowed up. Consider buying the following items new.
Fridges and freezers: It’s a good idea to buy refrigeration new for the following reasons:
You have the assurance that your fridge or freezer is up to health code
You get the maximum life of your purchase
Repairs to refrigeration equipment are very expensive. You want to avoid refrigeration malfunctions because the cost of repair can supercede the cost of the equipment. A down fridge could mean losing your entire inventory or closing your doors until you’ve fixed the problem and replenished spoiled food.
Ice machines: Cross contamination in ice machines can cost you more than just your equipment. A bad health inspection can be enough to shut your restaurant down. Thus, ice machines are an investment you’ll want to purchase new.
pro tip: make sure you’re buying commercial equipment. residential grade equipment cannot handle the capacity or wear and tear that commercial restaurant equipment was built for. for example: restaurant ovens are built to stay on for long periods of time. residential equipment will not stand the test of time and is likely to fail you when you need it most.
Leasing Restaurant Equipment
If buying restaurant equipment just doesn’t sit well with you, you do have another option: leasing restaurant equipment. But just like a car, you only have that equipment for a contracted amount of time, and there are pros and cons to this arrangement.
No lump sum costs: Weekly or monthly lease payments can be cost effective for restaurants that are just starting. Your payments begin when you start making revenue.
Preserve working capital: Instead of paying for the full cost of equipment upfront, save those precious start-up pennies for the operations that really need it.
Easy upgrades: If you have plans to upgrade to more sophisticated equipment once your revenue gets rolling, it’s much easier to swap out a leased item than to sell a purchased item.
Better equipment: Since you’re not paying for the entire cost of the equipment up front, you may be able to afford a lease on a better piece of equipment from the start.
No repair costs: If leased equipment breaks, you’re not responsible for the cost of fixing it. The leasing company should cover the repair costs.
Ideal for temperamental equipment: Leasing is ideal for pieces of equipment that break easily, like coffee machines or dishwashers.
Option to buy: Many leasing companies give you the option to buy the equipment for a subsidized cost at the end of your lease.
No equity: When you purchase equipment, you build equity. If times get tight, you can sell equipment and make some of your money back. With leasing, that money just goes out the door.
Fine print: Leases comes with interest rates and early termination fees. If you want to swap out a piece of equipment because it doesn’t perform the way you want it to, you take on an extra cost.
Types of Equipment Leases
If you’re confident you want to purchase the equipment at the end of your lease but don’t want to put down the total cost up front, this lease could be for you. Expect higher monthly payments but a lower buyout at the end of the lease.
Fair market value lease
This lease allows you to acquire the latest equipment at a lower monthly cost. Companies that offer this type of lease often defer a portion of the equipment’s purchase cost to the end of the lease. At that point you’ll have the option to purchase the equipment for fair market value, return the equipment, or continue the lease on a month-to-month basis.
Quarterly equipment lease
Leases are usually paid on a monthly basis. You can arrange to pay your lease quarterly – but expect larger payments and higher interest rates.
Semi-annual, annual, seasonal lease
These leases are ideal for restaurants with distinct busy and slow seasons. Instead of paying the lease monthly, you can arrange to pay for it during your busy season when you’re making the most revenue.
Where to Lease Equipment
Many equipment companies will have an equipment lease program. The most common kind of lease program is lease-to-own. Note that every equipment company offers different terms for their leases. Make sure you read the fine print and understand the full scope of the contract before signing on the dotted line.
The digital world offers a multiverse of selection. Advantages to online shopping are that you can easily compare and contrast different brands, find different styles, and compare vendor pricing. The disadvantages, however, are that you don’t get to see or test the equipment in real life. Shipping can be also hefty due to the size and weight of the item, although some online suppliers cover the shipping costs.
Shopping at a brick and mortar store allows you to see the equipment and visualize how it will fit into the rest of your kitchen. You have the added benefit of speaking with a salesperson who can show you options that fit your needs. Based on their experience, salespeople will have insider information on products, how they perform, and how they compare and contrast to each other. With retail suppliers, however, you might find limited selections.
It’s just you and the person on the other side of the sales ad. Private sale might result in the best deal. You can negotiate price and request to test out the equipment before purchasing, unlike buying from commercial sellers. But there’s no certification, so you’ll have to investigate the warranty and look out for problems on your lonesome without any guarantees. Sites like Kijiji in Canada and Craigslist all over North America are good places to start if you’re looking for a private sale.
Commercial auction houses are home to buying restaurant equipment at discount prices, when a restaurant has closed and is looking to liquidate their equipment assets as quickly as possible. As with all used equipment, you’ll have to perform an assessment, inquire about warranty, and do some research on how long the previous owner was open. And while auctions used to be exclusively live, many have moved online so the equipment selection is more diverse.
Restaurant equipment stores either have a used section or exclusively sell used equipment. They likely have a limited selection, but as we mentioned before, some resale stores verify, certify, and refurbish the equipment they receive, providing their own guarantees that mimic warranties.
Restaurant equipment financing is an equipment loan that allows you to finance the value of the equipment you need. Traditional loans require you to have sources of collateral that the bank can redeem, like a mortgage. Collateral shields the bank in case you can’t pay back your loan with cash. With restaurant equipment financing, the equipment itself is collateral for the loan.
This means that:
You don’t need to put other sources of capital on the line
You can still seek other lending options because your collateral isn’t tied up
Restaurant equipment financing also gives you the ability to negotiate financing on your own terms rather than a vendor’s.
Doesn’t limit financing options: As we mentioned, since the equipment itself is the collateral, you don’t need to tie in other sources of collateral.
Better equipment up front: Get better equipment sooner using your loan, and reserve the rest of your cash and sources of financing for other operational needs.
Flexible payment options: You can negotiate payments that work for you.
Tax savings: For U.S. restaurants, equipment acquisition comes with special tax deductions under IRS 179.
Minimum time in business: Most lenders will require that your restaurant has its doors open for a minimum amount of time in order to qualify. Since this typically ranges from one month to one year, many newcomers can’t get an equipment loan out of the gate.
Limitations and fine print: Make sure you understand the limitations of the restaurant equipment financing terms. Some will not allow you to use the loan on used equipment. Others will limit you to specific brands. More come with additional fees, early payoff penalties, late charges, unexpected taxes, and any other unwanted clauses. Ensure the terms of your agreement are flexible enough to meet your needs and that you understand all the fine print.
While acquiring restaurant equipment is a lengthy, costly process, there’s good news: your restaurant is officially transitioning from an idea into a reality. You’re putting your hard-earned operating budget to good use and you’re in the final stages of preparation before you can open your doors.
Silvia is the former Digital Marketing Manager for TouchBistro. During her time with TouchBistro, she managed and coordinated content for the RestoHub blog.