Why You Should Definitely Consider Restaurant Equipment Leasing

Keeping up with the latest restaurant equipment for your business can be an expensive task. Whether you’re looking to replace outdated or simply fix your current equipment, the price tag may come as a shocker. Today, we will touch upon the pros and cons associated with restaurant equipment leasing to help you come to a conclusion on what the best option for your restaurant is.

The Advantages of Restaurant Equipment Leasing

• Save on Initial Capital

When it comes to restaurant equipment leasing, there are minimal upfront costs. Besides saving money initially,  equipment leasing provides business owners with affordable and predictable payments. This frees up cash allowing you to use it on other business initiatives such as payroll, marketing campaigns and even funding new food orders.

• Tax Benefits

The money spent on restaurant equipment leasing is categorized as a rent expense. With that being said, leasing is often 100% tax-deductible under the 179 IRS Tax Code. Check with your tax advisor to determine the benefits for your business.

• Equipment with a Short Lifespan

Most restaurant owners seem to agree that the average lifespan of commercial kitchen equipment is around 10 years. But did you know that certain pieces of restaurant equipment don’t last nearly as long as the average? These items include:

• Ice Machines and Coolers
• Dishwashers
• Coffeemakers

Which is Better for Your Business: Buying or Leasing? Let Us Show You!

• Free Repairs

When leasing restaurant equipment, you aren’t financially responsible for maintenance and repairs. If equipment malfunctions, the leasing company must fix the equipment at no charge. The only downside to free repairs is the timeline of completion. While the repairs are covered by your plan, they may take a little longer to fix depending on the responsiveness of your lender; so pick a good one!

• End of Lease Buyout Option

Equipment leasing companies may offer a lease-to-own option.  Lease-to-own grants ownership of the equipment to the lessee following the receipt of all scheduled payments. This option is great when the equipment in question is expected to last longer than average.

The Disadvantages of Leasing Restaurant Equipment

• Lack of Opportunity to Build Equity

After a lease is up, most restaurant equipment must be returned to the lender. This downside occurs when the restaurant equipment is still worth a significant amount of money at the end of your lease. Unfortunately, with leasing, you’re unable to use that equity towards a new unit. Instead, you’re faced with the decision on how to acquire your next piece of equipment.

• High Interest Rates

It’s important to shop around for the more affordable restaurant equipment leasing company. Some lenders can hit you with high interest rates and added fees. While monthly payments may seem low, calculate the total amount you’re responsible for during the length of the lease. Make sure you choose a lender that is upfront with their terms and conditions.

Whether you choose to lease or buy your restaurant equipment, CMS Funding is here to help! Click here to see why our clients choose us.