16 March 2010
Total Cost of Ownership for Restaurant Equipment
Posted by Crystal under: News; Recession Tips & Tricks .
Before buying new equipment, it is important to understand and consider the Total Cost of Ownership (TCO) of each piece of your restaurant’s equipment. Restaurant equipment is expensive by its nature, and its costs only continue over its lifespan as the equipment ages, including energy use, repairs, training, etc. Performing TCO analysis helps restaurants make smart business decisions when purchasing new equipment. By contrast, disregarding the Total Cost of Ownership (TCO) will likely result in thousands of dollars of extra expenses. Here are the main factors to consider during TCO analysis:
Energy Usage. Most types of equipment used in a restaurant use a lot of energy. Thus, selecting equipment that has even a small differential in its energy consumption compared to other units will result in huge savings over time. One way to find out about the energy efficiency of the potential piece of equipment is to check Energy Star information or purchase equipment marked with Energy Star for Food Service Industry. Often, the energy efficient types of equipment cost more; however, there are significant cost savings down the road.
Size and Volume. When buying new equipment, consider the trade-offs between the size of the equipment, the amount of energy it will consume, the restaurant needs, and the restaurant’s growth potential. On the one hand, the large piece of equipment will produce more volume. On the other hand, larger piece of equipment will result in much higher energy expenses, as you ramp up to full capacity. Besides, larger capacity might not be necessary for the restaurant. The other pitfall to avoid is buying equipment that has a small capacity. Equipment with small capacity will get overused, which will decrease the lifespan of such equipment because the unit will never get a downtime required. Lastly, figure in your restaurant’s growth potential when determining the capacity of equipment.
Labor Efficiency. Before buying new equipment, always find out how easy it is to operate the unit. If it takes too much time and effort to have the unit running, and if the market offers more operator-friendly units produced by other manufacturers, gear towards equipment that is easiest to use. Restaurants usually have a high turnover rate for their workforce, making it important to select such equipment that requires least amount of training. Equipment that is hard to operate will reduce your labor efficiency and slow down your output. A good piece of equipment over time should only improve your employees’ efficiency, not slow them down.
Safety. Consider the safety features and make sure the equipment does not increase the chance of safety hazards. Having an unsafe equipment will increase your insurance costs and increase an occurrence of work-related injuries. Provide appropriate training to your employees. Consider the main safety hazards in most restaurants, such as, for instance, fire, and make sure your equipment does not increase the occurrence of such hazards.
Service and Parts Availability. Check what kind of service programs are offered for your equipment, find out how easy it is to repair equipment if it breaks, check if it is easy to find spare parts quickly, and if there are special warranties or repair programs. Find out how quickly and how cheaply (or costly) you can repair your equipment, and if you can do it locally. Being aware of the service and repair programs, parts availability and warranty options will reduce the downtime of the equipment and the resulting loss of income.
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