Rental cooking gear a hit with hospo industry

Thursday, 4 May 2017

Chef Simon Wright in The French Cafe kitchen which he partially re-equipped using a rent-to-buy scheme.

Faced with expensive renovations at his Auckland restaurant, The French Cafe's head chef Simon Wright decided rent-to-own was an affordable way of acquiring everything from new bench tops to gas ovens.

'It gave me the chance to keep my cash flow and get the equipment I wanted without spending an astronomical amount of money at the beginning … $400 a week seems quite easy to do'.

Black and White Coffee Cartel owner Bink Bowler says renting his first coffee roaster was a good investment because it dramatically cut his coffee costs.

Wright is not alone and renting equipment - right down to restaurant tables and chairs - is becoming increasingly common in the hospitality sector.

It's an attractive option for established businesses wanting to expand, and with a basic commercial kitchen fitout costing about $50,000, it helps new comers lacking start-up capital to get a foothold in the industry.

* Renowned Moeraki restaurant and other remote areas starved for kitchen staff**

Choice Catering Equipment customer services manager Graeme McFadyen✓ says having finance provided through rental companies such as Silver Chef is also popular with suppliers.

'We get paid within 24 hours'.

Christchurch Black and White Coffee Cartel director Bink Bowler rented his first coffee roaster for 18 months and says it is a useful option in emergencies.

'Say your fridge motor blows and one fridge is $2000. That's a lot to take out of cash flow. It means you can expand your business without bank debt'.

Restaurant Association of New Zealand chief executive Marisa Bidois says leasing also allows businesses to keep up with new technology.

'Some of the latest ovens, you're looking at $12,000 to $15,000'.

But she warns those signing up for rental deals need to be sure turnover will cover their rental and other commitments.

Christchurch liquidator Lynda Smart says rental equipment now appears to be the norm, and all four of her recent hospitality business liquidations had gone down that route.

'People think 'oh great, I don't have to pay up front for all my gear', but you have to factor it into your costs though'.

ASX-listed Silver Chef entered the New Zealand hospitality rental market five years ago with a 12 month rent-try-buy agreement that finances equipment purchased from established hospitality suppliers.

If customers opt to buy the equipment at any stage during the rental term, they pay the original as new price, minus half the rent paid.

Silver Chef is currently offering up to $70,000 pre-approved until the end of June.

According to its website calculator the weekly rental for $70,000 worth of equipment would be $888, and it is waiving the requirement for director guarantees, balance sheets and business forecasts.

New customers need only fill out an application form and pass a credit check and New Zealand sales manager Ray-Charles Smading says the deal is open to anyone.

'You can be someone with 20 years experience in hospitality or someone who can bake biscuits and wants to own a cafe'.

Smading confirmed that if a business went under before the 12 month term was up, they would still be liable to pay the full rent.

'From out point of view we [own] the asset and have the ability to re-market the asset through our dealer network'.

However, he says the 'fall over' rate is low because they do not approve customers unable to service the weekly payments.

Hospitality Rentals owner Mark Hardy has been in the business more than 20 years and says repossession rates have dropped.

'Three years ago it was just about every two weeks, but this year it's been twice at most'.

Hardy, also an equipment supplier, tends to rent to smaller outlets and handles any maintenance issues.

'If it breaks down we fix it, if it breaks down too often, we rip it out and replace it'.

He is wary of customers wanting to rent everything because he says a weekly equipment rental bill of $1000 to $1500 probably isn't sustainable here.

'That's a huge amount coming out on top of the lease on your building, your staff wages and power costs. We're not Sydney or Melbourne'.

And when a business owner decides to move on 'if everything is rented you have nothing to sell apart from good will'.