Opening a restaurant is not cheap. From purchasing new equipment to paying employees, there are many costs that come with running one of these businesses and it can be difficult for small restaurants who might only want their investment to grow quickly in order to stay afloat while they figure out what kind of food service business will work well with the long-term. Leasing instead of buying allows you to get into your space without having all the cash upfront required by purchasing outright, so if you don’t think you’re able to buy your equipment upfront, then consider leasing first.
When most people think about buying a new restaurant, they’re looking for ways to save money. But what if you could lease the equipment and not pay upfront costs? Mountain Sales & Service has everything that your business needs in its quest toward becoming fully operational with our expert team at hand! Give us a call today so we can provide more information on how this might benefit you too. In the meantime, check out this article that covers all of the advantages of leasing your food equipment as opposed to buying it upfront.
You can acquire essential equipment, even with a limited budget
By leasing foodservice equipment, you can acquire the equipment that you will need so you can get your business up and running, even if you have a limited budget to work with.
For example, you have a small start-up business and you need equipment so that you can start your business and accept customers. You can start out by leasing equipment that you can pay a monthly lease for, which you can attain from your income by providing services to your clients. Important tip: you do not necessarily need to have good credit to lease foodservice equipment, which makes it beneficial for small business owners or startup businesses.
Leased equipment can be tax-deductible
It will depend on how the IRS categorizes your leasing equipment. Lease payments are usually deductible because they are considered business operating expenses. The difference between buying and leasing equipment is that you have to pay the taxes upfront when you purchase. On the other hand, with leasing equipment, you can just pay your taxes per month which can be helpful for small business owners who are just starting their businesses. This is an effective way to decrease the cost of the equipment. Keep in mind you cannot take a tax deduction for depreciation on leased equipment.
Leasing is better for short-term purposes
Leasing can be a good option for those who are just starting their businesses. With short-term leases, you don’t have to worry about paying storage fees or selling the equipment at end of the term; it’s all taken care of in advance!
However, this also means that if your company has grown past what they need based on initial investment costs, then there won’t always be room available when return time comes around because everyone wants these things again (even though we know how much easier returning something gets!). If you want to make the best choice, then check out your contract for end-of-lease opportunities.
Can buy equipment after the end of the lease
Most leasing companies offer a buy-out option during the end of the lease term, but keep in mind that approval can depend on your credit rating. This option is great for business owners who do not have a budget to pay for the equipment upfront, but are planning to keep the equipment for the duration of their business.
Repairs are covered by the supplier
When your leased equipment breaks or runs into any kind of issues, you can rely on the leasing company to take care of the repair so you can use it again.
Lessen your costs
Leasing foodservice equipment like commercial refrigeration units and ice makers can help you save your start-up cash for other items such as supplies, food ingredients, rent, the salary of your employees, etc. Instead of paying a huge sum of cash for food service equipment, you can use it toward your first food order, marketing budget, or payroll.
Can be upgraded
Once your equipment lease is up, you may be entitled to get an upgrade from the same supplier but it will depend on the lease contract. This way you can get new equipment for free as long as you continue your lease contract with them.
Add-on
When leasing equipment for your restaurant or foodservice business, if you need to lease more equipment, you can coordinate with the supplier so that you can add more equipment to your leasing contract.
Ideal for start-ups or small businesses
There’s nothing worse than starting your own business with a hefty price tag. You’ll need equipment, renovations for the space you’re going to work in — how are going to pay all those bills? Well, there is one solution: leasing! With this option comes some great benefits like flexibility concerning financial capabilities because it doesn’t require ownership of any products or services offered by leases companies – just their assets, which can help reduce initial start-up costs while giving entrepreneurs more time before they have stretched themselves too thin financially due poor cash flow management when running low on funds during growth stages.
What are the disadvantages of leasing restaurant equipment?
Leasing restaurant or foodservice equipment can have benefits, but it also comes with drawbacks. Here are some of the downside of leasing equipment.
Do not have the opportunity to build equity
Equipment leasing can be a great way to get the equipment that you need without having any upfront costs. However, there are some downsides such as not being able to build equity on your lease and losing rights if it goes into default or forfeiture – which means at end of term (the total remaining value), all funds come back together with nothing left over for new purchases.
For instance, if you bought a new refrigerator and you decide to sell it, you can use its equity to get a new unit. When selling equipment, it’s important that customers understand how much equity they will have in their purchase as well – which is why business owners love purchasing rather than leasing.
Leasing does not cover all costs
Not all items are available for leasing. For example, if you have a small food service business, you can lease most equipment such as refrigerators, ice makers, and dishwashers, while other items like supplies, furniture, and dinnerware must be purchased upfront. If you have the budget to get all the necessary equipment, tools, and supplies to start your business, then you should go for it.
High-interest rates
One benefit of buying equipment is that you do not have to pay interest rates. If your credit rating is not good, then you may have to pay high-interest rates while leasing your equipment. This is not good as it can increase the overall cost of the equipment that you are leasing.
Early termination fees
Foodservice equipment lease contracts are often very strict about early termination fees so make sure you know what they entail before signing. If it turns out that the company has an expensive penalty for premature returns, then this could end up costing more than simply selling your old assets back to them at the initial cost, which would have been less costly in general due to both loss of use and respectively lower resale value over time (especially if there’s no guarantee when buying).
What are the things that you need before you lease food service equipment?
When leasing equipment, it means you do not own it, so you will be billed weekly or monthly by the supplier of the equipment. You will sign a leasing contract but you must review it carefully so you will understand and agree with the terms of the supplier. In case the restaurant closes before the lease ends, then you may be liable to pay the rest of the payments for the whole duration of the lease.
The layout of the kitchen must be considered before you decide what kind of equipment you will be needing to lease. A restaurant kitchen includes different types of equipment such as a refrigerator, oven, grill, dishwasher, cooler, ice maker, coffeemaker, etc.
Buying or Leasing Food Service Equipment at Mountain Sales and Service
You can buy or lease food service equipment from Mountain Sales and Service. Please let us know so we can assist you with your equipment needs. If you need ice-making machines for your business, we can help you. Please visit this link for more information about leasing foodservice equipment. You can contact us by filling up this contact form here.
We have been offering food service equipment since 1980. We also offer parts for refrigeration equipment and lease foodservice equipment. If you have any questions or inquiries regarding our products or services please do not hesitate to reach out to us. You can call us at 303-289-5558 or call toll-free number 800-847-2557 or send us an email at sales@mtnsales.com. We are located at 6759 East 50th Avenue Commerce City, Colorado 80022. Choose a reputable company like Mountain Sales and Service for all your food equipment leasing needs.
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