The hospitality industry is exposed to economic swings more than most. When the economy is booming and people have more money in their pockets, they will happily eat out once or twice a week. But when belts need to be tightened, it’s restaurants which are often the first notch.
The sector has found it particularly tough going in the past couple of years due to the pandemic. From being forced to close to being allowed to open but with limited capacity, it was hard enough to predict consumer behaviour, let alone ever-evolving Covid restrictions.
Even outside of lockdown restrictions, restaurants have to contend with things like no-shows. In a recent survey, it was reported that as many as one in seven bookings fail to show up at restaurants, costing the sector £17.6bn a year.
A lot of this uncertainty around revenues explains why so many restaurants use catering equipment finance, rather than buying outright. Why would you potentially create cash flow problems and use all your reserves when you can pay in smaller monthly payments?
There are other reasons why catering equipment finance appeals to restaurants – let us take look at some of them:
Afford top-of-the-range equipment
From ovens to restaurant furniture, cash registers to cold rooms, catering equipment can amount to thousands of pounds of outlay if you were to buy any of it outright – and you can easily add an extra zero if you want top-of-the-range equipment.
With catering equipment finance, however, it becomes achievable to choose higher quality machines that will enable you to deliver the high-quality food and service that you’ve promised your customers.
Asset finance allows you to access catering equipment based on your monthly/quarterly payment capabilities rather than immediate cash reserves, allowing you to choose restaurant assets based on your business requirements rather than your immediate cash budget.
So, higher quality, top-of-the-range equipment that may have been out of reach in a cash purchase can become attainable by spreading the cost over a longer term.
Protection against uncertain economic landscapes
The pandemic has shown that successful restaurant owners have had to learn to adapt and evolve their operations in uncertain times. But at the same time, they have to ensure they’re doing as much as they can to protect themselves from the ever-changing economic picture.
Keeping cash in reserve is the most obvious way of providing your business with a buffer, but sometimes the need to replace or bring in new equipment is inevitable to move forward. During uncertain times and economic outlooks, opting for catering equipment leasing can preserve cash as well as offer protection against rising inflation, by fixing rental costs and the interest to be paid throughout the duration of the contract.
Provides financial flexibility
As a business owner, you want to ensure you have some financial flexibility, so that you can cover any unforeseen problems, or take advantage when opportunities arise.
The good news is that other credit lines are not affected by leasing catering equipment. So, you are free to make an application for a business loan as and when you need to. As an added bonus, finance lease rentals can be 100% tax deductible against profits (check with your accountant).
There are many tailored equipment finance options available depending on your restaurant’s requirements. From hire purchase to sale and leaseback agreements, Shire Leasing will help you find an asset finance solution that best suits your business’s cash flow.
All throughout the process, we will ensure a high level of service, to get the right funding for you as quickly as possible, whether you need restaurant financing or to lease commercial kitchen equipment.
To find out more or to discuss your asset finance options further, give Shire Leasing a call today on 01827 302 066.