Is Cheaper Restaurant Equipment Actually Cheaper?

Two pieces of restaurant equipment do essentially the same job. One costs $4,000. The other costs $6,000. At first glance, the decision seems straightforward. The $4,000 option is cheaper.

But what if it uses more energy every day? What if replacement parts are difficult to source? What if the warranty is shorter, it requires more maintenance, or employees spend more time operating and cleaning it? What if it needs to be replaced years earlier?

Suddenly, the answer isn't quite as obvious.

Restaurant equipment is an investment that can remain in operation for years, which means the price on the invoice is only one part of what the equipment will ultimately cost the business. The U.S. Environmental Protection Agency's ENERGY STAR program specifically recommends that restaurants consider life cycle costs, including purchase price, annual energy costs and other long term costs associated with equipment.

The better question isn't simply, "Which one costs less to buy?"

It's "Which one costs less to own?"

Purchase Price is the Beginning of the Calculation

Restaurant operators have plenty of reasons to pay attention to upfront price. Opening or renovating a restaurant requires significant capital, and replacing equipment unexpectedly can put even more pressure on cash flow. There is nothing wrong with choosing the less expensive option when it meets the restaurant's needs. The problem comes when purchase price becomes the only comparison.

A more complete way to evaluate equipment is through total cost of ownership, or TCO. Depending on the equipment, that can include the original purchase price, installation, shipping, energy, water, consumables, maintenance, repairs, labor implications and eventually disposal or replacement. ENERGY STAR specifically identifies many of these costs when advising commercial foodservice operators to look beyond acquisition price.

You don't necessarily need a perfect forecast of every dollar the equipment will ever cost. In fact, some future costs, particularly unexpected repairs, are inherently difficult to predict. The point is to make a purchasing decision using more information than the number printed on the quote.

Start With How Long You Expect to Own It

Consider a purely hypothetical example.

Equipment A costs $4,000 and is expected to provide four years of useful service.

Equipment B costs $6,000 and is expected to provide ten years.

Ignoring every other cost for the moment, Equipment A represents $1,000 of purchase price for each year of expected service. Equipment B represents $600.

That does not prove Equipment B is the better purchase. Expected life isn't guaranteed, and the calculation still ignores maintenance, utilities, performance and many other variables. But it demonstrates why the lowest purchase price and the lowest long term cost are not necessarily the same thing.

Before buying, ask what information supports the expected service life. Talk to the manufacturer, dealer and service professionals. Ask about the equipment's construction, maintenance requirements and warranty rather than relying on assumptions that a more expensive machine must automatically last longer.

Then Look at What it Costs Every Day

Some restaurant equipment operates for hours every day, year after year. Small differences in operating costs can therefore accumulate. Energy is an obvious example.

ENERGY STAR explicitly recommends comparing life cycle costs because higher efficiency equipment can cost more initially while producing lower utility expenses over time. Its commercial foodservice program covers equipment categories including ovens, fryers, griddles, steam cookers, refrigerators, freezers, dishwashers, ice makers and hot food holding cabinets.

The potential differences aren't always trivial. ENERGY STAR's current commercial foodservice information, for example, estimates annual energy bill savings of approximately $300 for certified commercial dishwashers and $185 to $240 for certified electric fryers compared with standard models meeting its comparison criteria. Actual savings depend on the equipment, usage, utility rates and other operating conditions.

Water can matter too, particularly for equipment that uses it continuously or in significant quantities.

Then there may be consumables. Filters, chemicals, cartridges, oil or other recurring supplies can turn a relatively small difference in monthly operating cost into a meaningful amount over several years.

When comparing two machines, ask for estimated energy and water consumption under comparable conditions and identify any recurring supplies required to operate them.

Maintenance Deserves Its Own Line in the Budget

Some equipment requires routine preventive maintenance to continue operating efficiently. Other machines may require calibration, filter changes, cleaning procedures or replacement of wear components. Those costs should not be ignored simply because they don't occur on the day the equipment is purchased.

Maintenance also affects equipment performance. ENERGY STAR notes that equipment performance can change over time as thermostats and controls fail, drift out of calibration or are readjusted, and that effective operation and maintenance practices can reduce operating costs and the risk of premature equipment failure and unscheduled downtime.

When comparing equipment, find out what maintenance the manufacturer recommends and how frequently it needs to happen. A machine that is inexpensive to purchase but expensive or difficult to maintain may tell a very different financial story several years later.

A Warranty is Part of the Economics

Two machines with similar specifications and prices can come with very different warranty terms.

Don't stop at asking, "Does it have a warranty?"

Find out what the warranty actually covers.

How long are parts covered? What about labor? Are there components with different warranty periods? Who performs warranty service? Are travel charges included? Are there maintenance requirements that must be followed to preserve coverage?

Also ask what happens after the warranty expires. A restaurant may own a machine for much longer than the warranty period, so the availability and cost of service after that point matters.

Ask About Parts Before You Need Them

Parts availability isn't particularly exciting when you're buying new equipment. It becomes extremely important when the equipment stops working.

Ask whether commonly replaced components are readily available, where they ship from and whether local service companies routinely stock or work with them.

A lower priced machine can become much less attractive if a relatively ordinary repair requires waiting an extended period for a proprietary component. The cost of a replacement part matters. The time spent waiting for it may matter even more.

Downtime Has a Cost That Doesn't Appear on the Repair Invoice

Imagine an essential piece of equipment fails during a busy week. The repair itself costs $700.

It would be tempting to say the breakdown cost the restaurant $700. But what happened while the equipment wasn't operating?

Did the restaurant have to remove menu items?

Did employees have to use a slower workaround?

Did another piece of equipment become overloaded?

Was emergency service required?

Did employees work additional hours?

Were sales lost?

This is why downtime can be difficult to calculate precisely but still deserves consideration. ENERGY STAR identifies reducing unscheduled downtime and premature equipment failure as benefits of effective maintenance practices. For equipment that is critical to the restaurant's operation, serviceability can be almost as important as the purchase price.

Don't Forget the People Using the Equipment

Operating cost isn't limited to electricity, gas and water. People cost money too.

Suppose Machine A requires an employee to spend 30 minutes cleaning it at the end of every day, while Machine B can be properly cleaned in 10 minutes. That's a difference of 20 minutes per day.

Over 300 operating days, that's 100 hours of employee time per year.

That doesn't automatically make Machine B the better purchase. The example is deliberately simplified. But it demonstrates why ease of operation and cleaning can have an economic impact that never appears on an equipment quote.

Watch employees use the equipment if possible. Ask how it is cleaned. Look at how easily components can be removed and accessed. Find out what daily procedures are required. Equipment doesn't operate in isolation, it becomes part of someone's job.

Installation Can Change the Price Before the Equipment is Even Turned On

Another mistake is comparing equipment prices without comparing what it takes to install them. One machine may work with the restaurant's existing electrical, gas, plumbing or ventilation setup. Another may require modifications.

There can also be freight, delivery, assembly, removal of old equipment and disposal costs.  Before approving a purchase, operators should understand the installed cost, not simply the equipment price.

A $5,000 machine that requires $3,000 of facility modifications isn't really a $5,000 project.

Rebates Can Change the Equation

The sticker price may not even be the final acquisition cost.

Depending on the equipment and location, utilities or other programs may offer rebates for qualifying energy efficient commercial foodservice equipment. ENERGY STAR maintains a rebate finder specifically to help buyers identify available incentives. That means an apparently more expensive model could potentially have a smaller effective price difference after available incentives are considered.

Rebates change over time and vary by location, so they should be verified for the specific equipment and restaurant before being included in a purchasing calculation.

More Expensive Doesn't Automatically Mean Better

This is equally important. The lesson isn't "buy expensive equipment." Price alone doesn't prove quality, durability, efficiency or suitability. A restaurant could spend significantly more on a sophisticated machine and receive very little additional value if the operation doesn't need its features. The goal is not to buy the cheapest equipment or the most expensive equipment. It's to buy the equipment whose capabilities and long term economics best fit the operation.

Sometimes that will be the least expensive option.

Sometimes it won't.

Build a Simple Ownership Comparison

You don't need a complicated financial model to make a better decision.

For two pieces of equipment, create a comparison like this:

Some of these numbers will be known. Others will be estimates. That's fine. The purpose isn't to predict the future perfectly. It's to expose costs that would otherwise be ignored.

Questions Worth Asking Before You Buy

Before purchasing a piece of restaurant equipment, ask the supplier more than what it costs.

Find out what is included in the quoted price and what installation requires. Ask about expected energy and water use, required consumables and recommended maintenance. Understand the warranty, including both parts and labor coverage. Ask who services the equipment locally and how replacement parts are obtained.

Find out what daily and periodic cleaning involves. Ask whether employees need special training. Understand which components commonly wear and what they cost to replace.

And perhaps one of the most useful questions is:

"If this machine stops working three years from now, what happens next?"

The answer can tell you a great deal about what ownership will actually look like.

The Cheapest Equipment is the Equipment That Makes Financial Sense Over Time

A restaurant equipment purchase is easy to compare when all you have are two prices. It's harder when you add energy, water, maintenance, repairs, warranties, employee time, serviceability, downtime and useful life. But that's precisely the point. The purchase price is visible because it arrives as one number on one invoice. Many of the other costs arrive slowly, spread across months or years. That doesn't make them any less real.

So when one piece of restaurant equipment costs $4,000 and another costs $6,000, the first question may naturally be:

"Why should I spend another $2,000?"

But there should be a second question:

"What will each option cost me to own?"

Only then do you really know which one is cheaper.