When it comes to paying for food service equipment, there are several different options, each with
their own advantages. In a Foodservice Radio interview, Robert Wolfe of Kavanaugh Restaurant
Supply in Madison, WI walks us through the pros and cons of paying cash, leasing, and financing
When it comes to equipment purchases, "it has been a difficult situation over the past two or three
years. Banks tend to be not as willing to offer funds to customers," begins Wolfe. There is hope on the
horizon however. "What we have seen in the past three or four months is there is a light at the end of
the tunnel. People are willing to make commitments to the future and we are seeing large
investments by operators back into their current operations."
So what is the best option for purchasing equipment? "There's really three different ways you can
purchase equipment. One is the outright purchase with cash. If you do not have the cash in your
pocket, the other ways are through bank financing or the traditional bank loan, or with leasing," says
Wolfe. The correct option depends upon the individual circumstances of the operator.
Cash is king and comes with several advantages. According to Wolfe, "you don't need to worry about
paying interest, you do not have to personally guarantee a debt, and you own the equipment. If you
hit rough times it cannot be taken away from you. However it does require a large outlay of cash,"
"Equipment leasing offers some advantages over cash," continues Wolfe. "You can extend your
payments over time and you don't have to come up with a large sum of money upfront to buy the
item. Leasing is generally treated as an expense, so payments can be deducted, compared to a
purchase where the cost is depreciated over a number of years. Equipment leasing also offers easier
funding. Most banks require a business plan and several years of banking relationship and credit
history, where an equipment leasing company will not need a business plan and may only require six
months of credit history."
Some manufacturers have taken to offering leasing programs to help operators get new equipment
"Right now, we are seeing some really attractive deals come from some of the major equipment
The other option is bank financing. "This typically offers better rates than equipment leasing and you
have the opportunity to take advantage of some incredibly low interest rates right now," says Wolfe.
For more information or to contact Kavanaugh Restaurant Supply, visit www.krsrestequip.com.
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Equipment Purchases - Cash, Finance, or Lease?
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