Stockpiling Restaurant Equipment & Pre-Planning

I just spent the day visiting used restaurant equipment dealerships around Greensboro, North Carolina. The first restaurant equipment dealership was housed in a 10,000 square foot red brick building. One large room housed new restaurant equipment and the sales counter. The two larger back rooms contained rows of fryers, grills, ice cream cabinets, coffee brewers and other small wares in various conditions ranging from almost new to needing repair. As I browsed through different sandwich press models, I noted the sheer volume and age of the restaurant equipment.

I asked the sales representative who was assisting me, "How can the owner afford to sit on all these assets? It doesn't seem like there is significant turnover?"

The sales representative explained it this way, "Our owner may only be interested in a restaurateur's deli slicer and freezer, but the restaurateur says 'he needs everything out by Friday' and essentially gives the other restaurant equipment away."

After more browsing and an informative conversation with the owner, I left with a couple of thoughts:

While most restaurant owners and food service entrepreneurs don't want to face the possibility of failure, it is a necessary part of planning. Assessing the liquidity of your restaurant equipment should be considered before opening. Less liquidity means more risk and should be factored in to your business plan.

If a food service establishment is not meeting sales projections or cash flow is unsustainable then closing may be required. Instead of selling your equipment once "the doors" close, posting an ad in the newspaper or on a website while you are still operating could increase your negotiating power. By reaching out to potential buyers before you close, you might avoid "giving" away your equipment.

My second thought concerns how entrepreneurs shop for restaurant equipment. Clearly there is a lot of used restaurant equipment available. If food service entrepreneurs are willing to shop and negotiate, they can find good deals on used restaurant equipment either from dealers or other food service entrepreneurs who are closing their business. Buying used means paying less if you do your homework.