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The trials and tribulations of equipment purchasing
Although it’s not as tangible as furniture arriving or walls being raised, de Vere’s Irish Pub proprietors Henry and Simon De Vere White recently reached some pivotal milestones in their restaurant opening process: selecting an equipment vendor and submitting their plans to the city for approval (see the next From the Ground Up installment to read about the permit submission process). Before long, the collective efforts of their various contractors and months of creating and revising plans will reach fruition.
The brothers are now drilling down to the logistics of the restaurant opening. The number of decisions involved in each step make the process an intricate dance between cost, efficiency and quality. Even as first-time restaurateurs, the business savvy and sensibility they’ve developed are a true testament to the swift tide of the restaurant business. After 12 months of pricing out various options with a number of vendors, they have reached a decision about their restaurant equipment. Henry cites this process as one of the most nerve-wracking they’ve experienced to date.
Something old, something new
Henry explains that while his original intention was to get a lot of the restaurant’s equipment used, “ … the more I got out there and looked, the more I found that wouldn’t work as well as I had originally thought.” One of the major factors that ultimately led Henry to abandon this plan, he explains, is the Health Department. Were they to find something wrong with any of these pieces, “ … you’re looking at spending far more than you would have in the first place.”
Much as he has with other aspects of the restaurant planning process, Henry says, “I looked at the possible areas I could mess up, especially with this being my first time. Where it could cost me down the line. I also might need the warranties. If things are going to break, the first year or two is when it’s going to happen. A couple hundred bucks here, a couple hundred bucks there …”.
To buy or not to buy?
Determining that new equipment was the way to go, the De Vere Whites next had to decide between leasing and purchasing. Essentially, it came down to choosing between the ultimately higher cost of leasing versus the uncertainties of owning. Even within the restaurant community, the verdict is split on this one. “I talked to a lot of restaurateurs and some swear you should own it, some swear you should lease it,” Henry remembers.
As he learned first-hand, these debates are particularly heated when it comes to dishwashers. Many restaurateurs believe that leasing is the way to go as it ensures maintenance and labor are included in the lease price. On the flip side of the coin, however, “Over a year, if you average it out, it almost costs as much as if you owned it. But you have a guarantee you can get it fixed.” While Henry did enough research to feel confident in this decision, he laughs, “I’m sure some people will read this article and think, ‘You idiot. Why did you lease?’”
The art of bartering
With these decisions behind them, Henry and Simon were then faced with finding the right vendor. To ensure that he sourced the best equipment for his purposes, Henry took bids from three different vendors, engaging in an extended back-and-forth with all of them over a 12-month period and calling upon fellow restaurateurs and career mentors to double-check his selections.
While bartering is an essential component of vendor selection, it’s also imperative to know when to stop. “At the end of the day,” Henry says, “they’re going to come down for you so long as you let them know you’re looking at other people and it’s time to play ball. If you keep going on and on, eventually they’re going to wonder if you’re really going to buy and why they should discount the product any more.”
Line-by-line
In the course of reviewing multiple bids, Henry quickly learned the importance of checking each one line-by-line. Throughout the bidding process he noticed that when he requested vendors bring the price on one item down, often the price of another item would increase, counter-acting any real savings. Henry says, “They’d lower one thing by $100 and then raise another by $150.”
Restaurateurs be wary: because these vendors are often selling equipment in packages, it’s crucial to be diligent about monitoring the total cost, rather than getting wrapped up in one vendor’s refrigerator price versus another’s. “I would compare one guy’s model number to another guy’s model number and there would be an $800 difference in price, even though it was the same product. You have a deal, X amount, and they need to make a certain percentage. You need to watch that percentage and get it down as much as you can. I’m sure there’s someone who has the same mixer I have and they probably got it for $500 cheaper. But I bet you that $500 is sitting somewhere else.”
Henry also learned the importance of comparing model number to model number. You have to do this, he learned, “ … because there can be a huge difference of quality; like one has wheels and one doesn’t.”
Although this all makes for tedious tracking on the part of the purchaser, Henry explains the vendors’ point of view. “Remember,” he says, “a lot of restaurants close so people know they have one time to get money out of you. Once they get your money they’re done with you unless you have repeat business or build a relationship. You just have to be careful.”
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