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The Benefits Of Leasing Your Catering Equipment

Mar 22, 2008
When you're starting a restaurant, one of the decisions you'll have to make is whether to lease or purchase your catering equipment. You need a lot of equipment, from high-end refrigeration appliances to transportation to tables and chairs, and all that costs money.

This is why many people choose to lease, rather than buy, at least in the early days anyway.

1. Leasing allows you to test business models. If you don't know whether you want a permanent walk-in freezer or you can get by with just a large top-opening one, you can just lease the cheaper one to see if it works out. You can try out having a large refrigerated display case for your desserts to see if that increases sales, or you can experiment with pressure-fried chicken and other new recipes without purchasing equipment you later wish you had not.

2. Leasing helps you maintain your cash flow. Businesses that are just starting out often have financial issues, from not being able to get large loans to simply not having enough certainty to justify sinking a lot of money into equipment. If you lease, even if you have plenty of capital, your good cash flow helps you grow your business with little restraint.

3. Leasing catering equipment lets you try it before you buy it. You love the new stainless-steel refrigerator line, but you don't know whether you want to invest in it? Lease one for a short term to see how you like it. (In this case, leasing with the option to buy once your lease is up is the best way to go.)

4. Leasing your equipment has tax advantages. Lease payments can generally be deducted as business expenses on your tax return, which will reduce the actual cost of the lease. While this doesn't quite have the same impact as the tax advantages of buying equipment, it does lessen the tax difference between leasing and owning significantly. In some cases, the math will work out in the favour of leasing.

5. Leasing allows you to use equipment and then discard of it when it becomes obsolete (or unfashionable, in the case of serving dishes and other things customers will see). Instead of you taking on the burden of ownership for something that may be unsalable in the future, you allow the lease company to retain that risk.

6. In some cases, leasing allows you to put the burden of storage on someone else. Space costs money. If you need outdoor catering equipment in the spring through fall but don't want to have to store it during the winter, you can lease it for the period you'll need it and then let the company take it back.

As you can see, there are some significant advantages to leasing your catering equipment, or leasing with an option to buy. Every restaurant and catering business is unique, with its own unique needs, so it is unlikely that all these will apply to you. In most cases, the choice is a combination of leasing and owning items, with most starting businesses opting for more leasing in the beginning than owning.
About the Author
Derek Rogers is a freelance writer who represents a number of UK businesses. For catering equipment, he recommends NTS, one of the UK's leading suppliers of commercial catering equipment.
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