Where does it go?

I spent a couple of hours touring a restaurant equipment dealership this afternoon. After perusing through rows of used ice cream cabinets, refrigeration units, and sandwich prep tables, I quizzed the owner on his business and the restaurant equipment industry.

It turns out that a larger and larger percentage of used restaurant equipment is being stripped down for parts and metal scrap. China's insatiable demand for metal is turning old fryers, grills, and refrigeration units into exportable scrap metal. This used restaurant equipment dealer has been approached by at least one interested party. This demand for metal also explains the rising price of stainless steel products.

Many startup restaurants shy away from used restaurant equipment because of the potential hassle from health department inspectors. According to this dealer, certain county officials are merciless when it comes to inspecting used restaurant equipment. The repair requirements and assosiated costs can be overwhelming. It clearly pays to gain an understanding of the health department policies in the county you wish to operate.

One last point. Restaurant startups rarely stay on budget. This restaurant equipment dealer's clients inevitably experience construction overruns (time and money), financing snags, or health department hitches. Consequently, they are overbudget by the time they are ready to purchase equipment. Make sure you build this in to your cash flow analysis.