When going into business, it is often much cheaper, initially, to purchase used equipment. However, more than this used equipment may cost you more money, or it might last well beyond its typical lifespan and become a steal.
There’s going to be a disagreement between which is better new or used restaurant equipment.
Benefits and Drawbacks of Buying New Equipment
New equipment is new, and this means that the equipment should be:
- Totally operational
- Free from defects
You’ve got a certain level of peace of mind when you select new equipment overused equipment.
5 Reasons for Only Buy New Restaurant Equipment
- Longer equipment lifespan in many cases
- Newest technology and improvements
- Less of a chance of equipment breaking
- Warranty on equipment
- Reduction in downtime if equipment breaks
Buying new allows you to rely on your own equipment for more. But there Are also some disadvantages to buying fresh, too:
- Higher initial upfront prices
- Higher costs for slightly used versus new models
Price is going to be the major disadvantage because the first purchase costs for a new piece of equipment will always be higher. However, there’s the net advantage of replacing the older equipment with new equipment, too.
What does this mean?
Net advantage may be broken down as such:
- Old gear costs over 5 years are:
- Operating cost of $5,000
- Depreciation price of 1,000
- Total costs of $4,000
Based on this particular model, we could see that the total cost of running an older stove could be $4,000 (these numbers are completely arbitrary).
The net costs of replacing the new stove could be:
- New equipment price over 5 years is:
- The initial price of $2,300
- Running cost of 3,000
- Depreciation cost of $1,000
- Sale of an older stove for $700
Based on this, the overall costs for the new equipment will be $3,600 with the net benefit of replacing the old cooker being $4,000 – $3,600 = $400. In this case, over the long term, it’s more feasible to buy the brand new stove because it is going to save the restaurant money.
There’s also the notion that it is better to not replace old equipment if it is not fully depreciated, however, this depends on the current condition of the equipment. When the equipment is low-maintenance and functioning like brand new, it could be better to hold on to the equipment rather than replacing it. Otherwise, if upkeep and maintenance are high, it may be best to purchase new even if the merchandise isn’t fully depreciated.
Tax advantages are one of the benefits of purchasing new equipment.
Advantages and Disadvantages of Purchasing Used Equipment
We’ve discussed why buying new restaurant gear is advisable, but there are a whole lot of benefits of buying secondhand, too. Whenever the equipment being purchased isn’t mechanical or electrical in nature, purchasing used may not be a problem.
Most issues happen when buying used appliances, stoves or other equipment that is prone to mechanical or electrical issues.
It often comes down to a decision between purchasing new equipment and repairing old equipment. This is the place where the net advantage, outlined above, will assist a business to understand what’s better for them within the long term.
When buying used, you might find that there are numerous reasons to do so.
5 Reasons for Only Buy Used Restaurant Equipment
Used equipment will benefit the buyer in several ways, including:
- Saving money. The main cause of the debate between new and used Restaurant equipment is money-related. A restaurant may have the ability to outfit their entire kitchen using high-end equipment if they decide to buy used instead of new.
- Like-new equipment does exist, and this equipment may be a fantastic alternative if you’re just beginning. While buying like-new, you are buying slightly used equipment that may even come with a warranty.
- Less waste. You are choosing to be more environmentally-friendly when purchasing used.
- Tax deductions do exist on new and used kitchen equipment under the current IRS Tax Code.
- Used equipment will depreciate slower than new equipment.
Since a large portion of food service businesses fails in their own first year (roughly 30%), there are benefits to purchasing used equipment. These used items may allow for sufficient cash to be leftover for adequate marketing and hiring of employees.
There’s also no harm in buying used equipment as a backup for current or new equipment that, if ceased operation, could cause a restaurant to suffer financial losses.
The issue with choosing used equipment is that:
- A lot of equipment will come from an unknown supplier, to never know what you are getting. Lack of proper standards and potential reliability or trust could lead you to buy a product that may not work or might be grossly misrepresented.
- Old equipment is likely outdated, which means you are not able to supply the best possible equipment to employees.
- Warranties may or may not exist. This implies that if a piece of equipment has a defect or breaks, then you might not have any other course to remedy the problem besides out-of-pocket expenses.
- You could be inheriting someone else’s issue. The state of the equipment might be under the standard, and there’s a chance that even after testing, the issue is sporadic and didn’t pose during testing.
Hidden financial prices may also exist, such as the unit was only repaired, but it has been repaired a lot of times in the previous month. The seller might not relay this info for you, so while the equipment works now, you may have to have it repaired very shortly.
Should you select new or used equipment?
It depends on your financial situation. New equipment should provide more long-term value, less upkeep and less stress that something may go wrong with all the gear. There’s a big difference between new and used commercial kitchen equipment, and when used means per month and not years, it can be a good purchase.
Generally, if the business has the finances to do so, buying fresh is the most suitable choice.