Pros & Cons of Commercial Kitchen Lease

Pros of Leasing Restaurant Equipment

Ability to acquire equipment with less capital

An equip­ment lease allows you to get access to the necessary tools for starting a new restaurant without having to spend a lot of money upfront.

It allows you to:

• Use a monthly payment scheme without shelling out a large lump sum.
• Lease equipment without necessarily having good credit. This is especially beneficial to many small business owners.
• Have more capital to cover other operating costs when starting out with your new commercial kitchen space.

(See more: Opening a Restaurant Checklist)

Tax Advantages

Leased restaurant equipment may be subjected to tax deductions depending on how the IRS categorizes your lease agreement. You must pay taxes upfront for items you purchase, but if you lease them, you pay taxes on monthly basis rather than in one big payment. It might be worth considering this affordable option if you're looking for an inexpensive way to get started.

For Temporary Needs

Leasing is especially helpful if you don't need the equipment in the long term. You may want to consider leasing if your restaurant is undergoing refurbishments, holding events, or in cases of emergencies, and even large-scale commercial catering events.

If your business is new, leasing can be an option if you want to start with less expensive, lighter-duty equipment until you know how many customers you and your staff can handle. You always have the option to return the kitchen equipment at the end of your lease period. Make sure to read your lease contract carefully before signing it since there are limitations to these leasing schemes.

Cons of Leasing Restaurant Equipment

Leasing Requirements

Along with rental fees, you need to take into account any leasing requirements that your supplier needs. This list includes, but is not limited to:

• Required insurance
• Rental charge per week/month/hour
• Terms of use for the equipment, and so on.

Inability to Build Equity

You cannot build equity on leased equipment because you don't own it. The amount left over on something after deducting the amount you owed is called equity. In other words, if the equipment is still worth significantly at the end of the lease contract, you can't get it back to finance new kitchen equipment.

Many business owners prefer buying their own equipment instead of leasing because of this. After purchasing certain equipment and using it for a couple of years, they may still sell this and use the equity to buy and upgrade to a better unit,

Only Limited Products Are Available for Leasing

Even though lease financing for restaurants is often seen by some entrepreneurs as an alternative to traditional bank loans, not all equipment and items are available to lease under the scheme or lease terms. Items such as smallware and furniture are not available under these schemes and if you are able to produce capital in one way or another, s usually the most cost-effective way to go

High-Interest Rates

Buying instead of leasing gives you the advantage of not paying interest rates. If your credit score is low, you may be forced to pay very high-interest rates on top of your lease payments. Termination fees may also be an issue so make sure to read and understand your lease contract.

"I'm convinced. How do I lease kitchen equipment?"

If you have weighed the pros and cons of leasing and decided that it is the best decision for your business, our team here at Culinary Depot can help you out!

Visit our website and choose your commercial equipment from our vast inventory. Get an instant quote and get in touch to find out the best options for your business today.

"If I don't want to lease, what should I do?"

Equipment Financing

Financing your equipment differs from leasing it because you pay off the entire cost upfront.

At the end of your financing period, you will own your piece of equipment outright. On the other hand, leasing does not allow you to own the equipment; you just rent it from the company.

Restaurant equipment financing is a type of loan that allows small businesses to borrow up to 100 percent of an important piece of equipment for their restaurant.

The concept behind this loan is that a third-party partner such as Credit Key provides an exact amount for a specific piece of equipment, which allows you to purchase that equipment immediately. Then, you pay back that amount, plus interest (or some percentage), over the estimated lifespan of the equipment.

To do this,

• Simply find the product you need from the vast range of equipment available on our site, and add it to your cart.
• Check out using Credit Key
• They will need some additional information and will let you know immediately if you qualify for business credit.
• Once qualified, you can now checkout using Credit Key for all of your business purchases.

Purchasing Discounted Products

Purchasing equipment is obviously the cheapest option in the long run but if you would like to cut down on capital costs, you may try purchasing commercial kitchen equipment at discounted pricing sections or even secondhand suppliers. These products may have minor damage like small scratches and superficial marks that should not affect their performance. 

Memberships

Be a member of Culinary Depot and sign up for the newsletter to receive exclusive savings for members. By signing up, you can get special offers and promo code that enables you to purchase at great deals. 

Ready to Take the Next Step in Your Restaurant Journey?

If you are ready to get started launching a café or restaurant, knowing your financial options is important. Get in touch, and we'll help you get all the restaurant equipment you need to run your business!