Leasing, Renting or Both?

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Leasing, Renting or Both?

With so much focus on equipment leasing and renting in the food service industry these days, business owners have never had as much choice as they do today when it comes to how they will finance their equipment purchases.

 

All options come with questions so let’s see if we can answer some of the basic ones:

 

Key benefits to leasing:

·         lower borrowing costs

·         easier on cash flow

·         longer terms

·         less money due on signing

·         wide range of assets that can be financed – virtually anything.

Key benefits to renting:

·         affordable weekly payments

·         fully open contracts

·         You can walk away after 52 weekly payments

But as a customer of ours recently showed us, it’s not an all or nothing question when financing a kitchen buildout.


When Harp Grewal was renovating his hotel property in Kingston, Ontario, and adding a branded franchise sports bar to his mix, he quickly determined his best option wasn’t one or the other – it was a blend of leasing and renting. Here’s why.

For the conventional equipment – $200K + of cooking line, refrigeration, walk-ins, exhaust, POS systems – he chose to go with a 5 year lease. There was no uncertainty with the equipment and therefore it was a no brainer – go with the best rate, the longest term.  Easiest cash flow to manage.

 

However, designers had also spec’d out for him a $40K Rational combi-oven.  Harp was concerned this large piece may not be the right fit for the kitchen over the long term. So he decided to try it out as a rental.  By renting the oven, he could see over the year if it suited his needs for the long term. If it did, he’d commit to it fully through purchase or lease. If not, he’d walk away.

 

Often times, the best financing solutions are a blend of a few good option.