Calculating total cost of ownership for your foodservice equipment

Posted By: Nick Adams Equipment ,

Owning and operating a restaurant comes with a significant price tag. Buying a new piece of kitchen equipment undoubtedly adds to your costs, both up front and over its lifetime. Add in energy use and the occasional repair, and the financial effects of new equipment can be felt for years after installation.

But this equipment is critical. Without it, you can't deliver on the promise of your menu. Understanding total cost of ownership is key to the ongoing success of your restaurant, whether you're new to the neighborhood or have a long-standing history.

Properly calculating your kitchen equipment’s total cost of ownership lets you assess the bigger picture of these hefty purchases. And while the direct expenses associated with the initial purchase and set-up are easily trackable, indirect costs are trickier to calculate. That said, they should still influence your buying decisions.

What goes into total cost of ownership?

When evaluating equipment, operating costs pose a major concern. Will this piece be energy efficient? Even the smallest of appliances can translate to an increased monthly energy bill. It may be appealing to invest in cheaper models to save money up front, but what will the long game reveal?

Unexpected downtime happens, often at the worst possible time. When your foodservice equipment isn’t working correctly, it’s not making you money. The solution? Do your research. Be aware of the availability of parts and the frequency of routine service your kitchen equipment may require. If replacing a key part requires a three-week turnaround, or there aren't enough knowledgeable service professionals in your area, reconsider.

Your chosen equipment should also be labor efficient. Does it work well with the rest of your kitchen? Is the operating manual overly complicated? Difficult-to-operate equipment slows down production, which means fewer orders can be completed. In contrast, easy-to-use equipment promotes greater efficiency in an often high-pressure environment. That means a faster kitchen-to-table process, more guests served and increased profits.

Not just for major appliances

While cost of ownership tends to focus on big ticket items, it’s a good idea to approach your other equipment through a similar lens. Vollrath, a manufacturer of stainless steel and aluminum smallwares and equipment, compares steam table pans by considering both operational cost and opportunity cost. They detail why it’s important to consider wear and tear as well as recognize the style of food your restaurant prepares to gauge whether the steam table pans you’ve selected will fare well.

Finding the lowest possible price for your kitchen equipment is tempting, but it’s not always the best decision in the long run. Do your research, engage with your foodservice supplier and ask the questions that make your kitchen cost-effective for years to come.

Picking out the perfect equipment for your foodservice business can be overwhelming, but don't worry. We're here to help. Check out our Restaurant equipment planning guide to brush up on the basics. And when you're ready to get started, contact us to be connected with a Boelter expert.