Pros and Cons of Investing in Used Restaurant Equipment

Opening a restaurant can be an exciting yet daunting endeavor. One of the biggest investments you'll make is in procuring all the necessary equipment to operate your kitchen. From stoves and ovens to dishwashers and refrigerators, outfitting a commercial kitchen is no small feat. With new equipment costing tens of thousands of dollars, many new restaurateurs consider buying used restaurant equipment to save on startup costs. Here's an in-depth look at the pros and cons of buying used restaurant equipment.

Used restaurant equipment refers to appliances, cooking implements, furniture, and wares that have been previously owned and used in a food service establishment. This includes stoves, refrigerators, pots and pans, dishwashers, prep tables, and front-of-house items like tables, chairs, and service stations. Used equipment can be purchased from restaurant supply dealers, online auction sites, or directly from restaurants going out of business. Prices are significantly less than brand-new equipment.

Below, we'll examine the potential benefits and drawbacks of sourcing used items instead of buying new ones. While used equipment presents an affordable option, there are risks involved. Consider the pros and cons carefully before making major purchases for your new commercial kitchen.

Potential Advantages of Used Restaurant Equipment

Significant Upfront Cost Savings

The most obvious benefit of purchasing used restaurant equipment is the lower price point. In an industry known for razor-thin profit margins, opening a restaurant on a tight budget is common. Used equipment presents substantial upfront savings, with items costing 30% to 50% less than retail on average.

For example, a new 6-burner commercial range can cost $5,000 to $10,000. The same make and model purchased would run you $3,000 to $5,000.

With markups of 100% to 300% on new equipment, secondhand purchases allow you to get more value for your dollar. Those savings can then be allocated to other startup costs like designing your space, hiring staff, and purchasing software.

Ability to Source Commercial-Grade Items

Another advantage to purchasing used equipment is the ability to obtain high-quality commercial-grade appliances and implements that normally come with premium price tags when new.

As a new restaurant, you need equipment that can withstand the rigors of a busy commercial kitchen. Used equipment allows you to buy sturdy, durable items from top brands like Vulcan, Garland, and Hobart that will hold up well.

Cheap new equipment made for home use will quickly break down, while quality used commercial equipment will serve you well for years. The discounted used prices make these heavy-duty items affordable for new businesses on tight budgets.

Potential for Negotiation

Unlike buying new equipment at fixed prices, purchasing used opens the door to negotiation. Sellers are often willing to bargain, so you can sometimes get an even better price than what's listed.

Industry experts recommend first making an offer 25% below the asking price. This leaves room for back-and-forth bartering until you agree on a fair price. Negotiating used purchases further stretches your budget.

Ability to Mix and Match

When building out a restaurant kitchen, only some of your equipment needs will rarely align perfectly. With used equipment, you can often mix and match different brands, sizes, makes, and models to cobble together a functional kitchen.

If you need a specific oven but the seller requires you to buy the stovetop, too, you can purchase it and then look for a used stovetop that suits your needs. This flexibility allows you to hand-pick quality used items that work for your space and concept.

Potential Disadvantages of Used Equipment

Limited Selection

While used equipment does offer cost savings, your selection is limited compared to buying new. You'll be reliant on whatever items are used that are available at the time you're purchasing.

For specialty restaurants like pizzerias or bakeries, it may be challenging to source used equipment that aligns with your concept. You'll have less control over makes, models, sizes, and features.

Be prepared for the search to take more time and effort than buying new. The key is to move quickly on used items when they become available.

Unknown Past Usage and Wear

Compared to new equipment with full warranties, you don't know the full history of used items. Assuming how well maintained or heavily used an item was in the past carries inherent risk.

The seller must provide comprehensive service and maintenance records to gauge how much life a used appliance has left. There's always a chance you invest in used equipment that unexpectedly breaks down sooner than anticipated.

Carefully inspecting used purchases and asking sellers detailed questions can help mitigate this risk. Facts like age, brand, past usage levels, and service history should inform your buying decisions.

No Warranty Protection

One significant drawback to used equipment is it does not come with a manufacturer's warranty like new items do. If your used refrigerator dies in the first month, you're likely responsible for repair costs.

Lack of warranty coverage means you assume more financial risk, especially if equipment fails prematurely. Ask sellers if any unused portion of the original warranty is transferred to you. Also, inquire about any protections provided should the equipment not work.

To offset the lack of warranty, build repair and maintenance costs into your budget. Take time to find a reputable restaurant equipment service company that can fix issues promptly.

Must be Professionally Installed

Improper installation can ruin even high-quality commercial equipment. Professional installation is recommended for used purchases to avoid safety issues, performance problems, and voiding any remaining warranty coverage.

Factor $500 to $5,000 for installation costs, depending on the complexity of the equipment. Utilizing certified technicians ensures your used equipment operates safely and efficiently without invalidating protections. DIY installation is not advised.

Potential Safety Hazards

Used equipment may have deficiencies or latent safety issues that take time to be evident upon purchase. Faulty wiring, leaky gas lines, and defective safety valves are just some of the hidden dangers to be aware of.

Thorough professional inspections prior to purchase can help identify safety hazards before they become catastrophic issues. Some additional steps to take include:

• Checking for gas leaks

• Inspecting electrical wiring

• Examining fire suppression systems

• Assessing buildup and grime

Proper vetting helps avoid situations in which unsafe used equipment leads to accidents, injuries, or property damage.

Must be Refurbished

Expect that used equipment will require some degree of refurbishment, such as deep cleaning, rust removal, dent repair, and part replacements. Budgeting $500 to $1,500 for refurbishment work can extend the lifespan of your used purchases.

Even quality used equipment that appears in good shape initially may need preventative maintenance, such as gasket and seal replacements. Therefore, refurbishment costs should be taken into account when negotiating with sellers.

Potential for Fewer Energy-Efficient Options

With energy costs rising, more restaurants are investing in ENERGY STAR-certified equipment designed for high efficiency and utility savings. When buying used, you're less likely to find equipment with the latest energy-saving features.

While used purchases offer immediate savings, you may pay higher operational costs over time due to outdated technology. Compare the long-term energy and utility costs when deciding between new and used purchases.

Key Considerations When Buying Used Restaurant Equipment

Below are some top tips to help you make informed used equipment purchases:

• Inspect firsthand before buying - Thoroughly examine the equipment in person when possible. Never rely solely on photos or descriptions. Physically inspecting for damage and wear reduces surprises down the road.

• Ask for service history - Request maintenance records and past repair invoices. This helps gauge how well equipment was serviced and maintained, which predicts longevity.

• Have a technician inspect —Hire an expert, such as an HVAC or refrigeration tech, to inspect used appliances prior to purchase. Experienced pros can spot issues not visible to the naked eye.

• Take appliances for a test drive - Don't take the seller's word that a used fridge or oven "works great." Test it yourself on location. Firing up appliances checks functionality and consistency.

• Evaluate the cost of necessary repairs - Note any parts needing repair or replacement. Estimate costs of fixes to inform negotiations. Factor repair expenses into the total investment.

• Research fair market value - Determine the normal used price for equipment in your area. Consult industry guides like the Blue Book to gauge what's a fair offer.

Conclusion

Investing in used restaurant equipment presents both significant benefits and notable risks. On the positive side, substantial cost savings and the ability to acquire high-quality commercial-grade items at a fraction of the price of new equipment can make used options very appealing, particularly for new restaurateurs operating on tight budgets. However, potential downsides include limited selection, unknown usage history, lack of warranty protection, and the need for professional installation and refurbishment, which can add to overall costs. For those considering this route, Texas Restaurant Supply can be a valuable resource, offering a wide range of used equipment options along with expert guidance to help balance affordability and reliability in outfitting a commercial kitchen.