When opening a restaurant, does it make more sense to purchase the equipment out right, or to lease?
the death rate of new restaurants in America is about 50% in the first year — which is why banks won’t lend money to start one. most new ventures are undercapitaized, so they lease as much as possible because they can’t do it the other way. Landlords and equipment lessors know this, as well as the risk they won’t make it, so they jack their rates up in compensation for the expected proportion of late payments [before the place goes broke]. this suggests that if you can raise the capital needed, you’ll be better off in the long run buying the equipment. In my area, there are plenty of used restaurant equipment places — evidence that ambitious new owners didn’t make it.
