Cooking up Success: Financing Options for Restaurant Equipment

By MENU Magazine

December 18, 2024

Industry Profiles , Promotions

Whether you’re dreaming of crafting artisanal pizzas, creating gourmet dishes or serving sushi, one thing is clear: as a restaurant entrepreneur, one of the most important choices you’ll make is choosing the right equipment for your kitchen. Your restaurant’s needs are unique. Understanding your options before you make the big purchases can help you save time, money and expenses now and in the future.

Since 1986, SilverChef has helped more than 74,000 hospitality establishments across Canada, Australia, New Zealand and the United States achieve their dreams. By providing flexible financial solutions for commercial kitchen equipment, SilverChef has options for everyone from start-ups to established businesses.

“When you have the dream to open your own establishment, that’s the time to start thinking about capital, cash flow and financing,” says Stuart Zalunardo, President, SilverChef Group, Canada and U.S. “The sooner you start thinking about what and how you’re going to finance your business, the more prepared you will be.” Zalunardo speaks from experience. With over 35 years in commercial and corporate banking, he has seen businesses grow and flourish. Since joining SilverChef’s Canada and U.S. team as president two years ago, he sees how the company provides opportunities for success. “The restaurant sector is so vital to the economy, and we are here to support them by providing different options for owners to build their businesses.”

For many reasons, some business owners may prefer to purchase their kitchen equipment outright, but for many others, this may not be the best way forward. “The most important thing for a business is maintaining cash flow. With produce and consumables, as well as staff to pay, it’s important to have cash available for day-to-day operations. If you buy your equipment outright, you can’t liquidate it and get cash back quickly.” By financing through SilverChef, owners can spread out the cost of equipment, which allows them to have more funds available for the business.

When you’re looking at financing, Zalunardo has another consideration for buyers. “The lifecycle of the asset you’re buying should match the financing term. If you’re buying a big range hood that will last four to five years, you can finance that on a longer term. But if it’s a high-use, high-turnover unit, you may want to consider shorter term financing or renting.”

SilverChef’s Rent-Try-Buy program gives owners, particularly those starting out, an option to try kitchen equipment, with the option of returning, upgrading, or purchasing. “This program provides business owners with a lot of flexibility. Maybe you realize you need a bigger fridge, or freezer a few months after opening,” says Zalunardo. “Or you change direction and now you need different equipment. With Rent-Try-Buy, you can exchange or upgrade your equipment at any time. You can choose between new and Certified Used equipment and if you decide it’s a good fit, a portion of what you paid in rent goes toward the purchase price.”

In Australia, Rent-Try-Buy is more than five times more popular than it is in Canada. “When I was with SilverChef in Australia, I saw the success owners had with the program. It’s been around longer there, and people take advantage of the flexibility it provides, especially in rapidly changing times. I think it’s a great option for businesses in Canada.” Raveena Oberoi from Just Cakes Bakeshop in Surrey, B.C., agrees. “Having the flexibility of Rent-Try-Buy has been huge, it makes my life as a business owner a lot easier. I’d recommend Rent-Try-Buy to everyone who needs equipment.”

“When it comes to running a business, we know there are things we can and can’t control,” remarks Zalunardo. “Whether you choose to rent, buy or finance your kitchen equipment, make sure you keep all your options on the table to make the best decision for your business.”

When you’re looking for kitchen equipment, Zalunardo suggests four things to keep in mind:

Do your research about what type of equipment you’ll really need. “I’ve seen beautiful kitchen designs, but then, when they’re dropping in a deep fryer or an oven, there isn’t enough space. Make sure you have enough room now and if you shold need to make any changes,” states Zalunardo. “People go for what they think they need, and not what they actually need,” he continues. “Is the higher priced fridge what you really need now? You need to consider what is the right asset type for your business and how it’s funded.”
Have a solid business plan. “Avoid using all your capital early. It’s fun in the early days to kit out a restaurant, but you need to plan and forecast how much you’ll need to fund your day-to-day,” warns Zalunardo. “Don’t spend more money early, where you don’t need it. This is where financing or renting kitchen equipment comes in. It keeps some of the capital back in your pocket, to help with operations and with paying for unexpected costs.”
Be realistic. While a budget is always recommended, when you’re starting a business, you must account for the unexpected, and then some. “Whatever your budget is, add at least 10 to 20 per cent,” recommends Zalunardo. “There are some costs you can’t control, like the cost of raw materials, wages and interest rate cycles. You need to be able to handle those fluctuations to keep your business running.” In addition, the budget that you have allocated for your kitchen equipment may not be enough for what you need. Financing allows business owners to purchase different or higher-quality equipment, which may help improve operational efficiency, decrease water or energy consumption.
Be mindful of your personal finance biases or perceived ideas at the door. Zalunardo knows some people have some personal preferences when it comes to renting versus buying or purchasing outright versus financing. “While some of this might be true when you’re looking at your personal finances, the same isn’t necessarily true for your business. Speak to your accountant to make sure you’re making the right choices for your business.”