December 9, 2013 |

Buying Equipment: New or Used?

By Daniel P. Smith

Photo by Rick Daugherty

Photo by Rick Daugherty

Jim Fischer’s been in the pizza game for nearly 40 years and in that time, he’s never purchased a new oven. “Not a single one. It’s always been a demo model or a remanufactured oven,” says Fischer, who, after a lengthy run as a Little Caesar’s franchisee, now owns Pizza Patrol, a two-unit operation in Sioux Falls, South Dakota.

Whether it’s an oven or other major components of the pizzeria kitchen, many share Fischer’s preference for used equipment, hustling to online outlets such as Craigslist and eBay, classified ads, industry Internet forums and distributors to take advantage of an increasingly deep buyer’s marketplace for used restaurant equipment.

Purchasing used equipment, however, still carries that age-old warning: Buyer Beware!

When buying new kitchen equipment, operators get exactly what they ordered, support from the manufacturer or distributor and warranties typically running from three to five years. Much of the new equipment also arrives with updated technology capable of producing energy savings or performance benefits that heighten one’s ROI.

“Any operator is better off buying new and taking the warranties and peace of mind that come with that,” says George Mills of J&G Mills, a Michigan-based company that sells new, reconditioned and used pizzeria equipment.

Despite Mills’ well-intentioned counsel, many pizzeria operators cannot bypass the allure of used equipment’s cost savings. When opening up his latest Pizza Patrol location, for example, Fischer purchased a 12-year-old walk-in for $4,000. The piece had only been used for two years and sitting in storage –– covered –– for the last decade.

“That same unit new would’ve cost me $13,000,” Fischer says.

Veteran restaurateur Sergio Bayeh, who runs the 12-unit Piara Pizza chain in southern California, adds that he frequently finds used equipment selling for 40- to 50-percent less than a comparable new item’s tally.

For many operators looking to reduce their financial outlay, the potential cost savings on a used model prove too enticing, frequently overpowering concerns that some used equipment might be more headache than workhorse.

“Just know: the results (when purchasing used equipment) swing both ways,” reminds Jim Kovacik, operations manager for Northern Pizza Equipment, a nationwide supplier of new and reconditioned pizza equipment.

Mills says the biggest challenge operators face when buying used equipment is that few have the ability to assess an item’s condition.

“I know people who’ve gotten great buys on used equipment, but I always recommend people be cautious,” he says. “I hear more tales of people getting stung than being satisfied.”

To share a tale of success rather than woe when purchasing used equipment, veteran operators and equipment distributors urge buyers to embrace these four practices:

u Run a cost-benefit analysis. When buying used, Fischer and Mills both encourage operators to review the cost savings. While a used piece will almost certainly tout a more favorable price, set up, shipping, inspection by a serviceman and repairs can quickly mount and drown the initial savings. The warranties that come with new equipment, meanwhile, add value and protection.

“You have to be a wise shopper,” Fischer says. “Realize that you’re not running your pizzeria for one day, but for the long term, so invest your money with that in mind.”

Furthermore, Kovacik says any operator needs to review his situation and consider if the used equipment will meet his store’s capacity and production needs or, conversely, if new equipment might expand the shop’s capabilities.

“Ultimately, you’re looking to get maximum value on your dollar,” Kovacik says.

u Know what to avoid. While well-maintained ovens and mixers can be dependable for decades, neither Mills nor Kovacik recommend buying refrigeration used. First, many older units fail to meet current codes, while no one can tell if a compressor will last another day or another year.

“When it comes to refrigeration, your money is better spent purchasing new,” Kovacik says, adding that walk-ins can be difficult to reassemble once taken apart.

u Get specs. Before purchasing, track down a spec sheet on the piece that identifies key stats, such as the unit’s height, width, depth and even its required voltage.

“Not all two-door fridges are created equal,” Mills reminds.

Furthermore, call the manufacturer to check if parts for the unit remain available. If not, future repairs can be costly or, worse, futile.

u Consult insiders. To track down equipment, Fischer will often lean on the solid relationships he’s built with repairmen, whom he says typically have a beat on well-maintained equipment.

Operators should also discover as much as possible about the equipment’s age and usage as well as the seller’s reputability by consulting references. Bayeh even suggests traveling to stores where a seller’s used equipment is now in use to gauge the quality of their refurbished work.

Also, suppliers, who are often certified distributors with strong ties to manufacturers, will know the projected longevity of most equipment and might share the names of fellow operators capable of discussing their experiences with a specific item.

When buying used equipment, whom do you trust?

While Pizza Patrol’s Jim Fischer has explored Craigslist for equipment in the past, he favors remanufactured items that come with a warranty from a reputable and longstanding equipment distributor. As one example, Northern Pizza Equipment’s standard warranty on its reconditioned equipment is 30 days labor and 90 days parts.

“This provides some security and accountability, which you won’t get from the guy selling on Craigslist,” Fischer says, adding that some used equipment has only been scrubbed down and polished to look — not perform — like new.

Piara Pizza’s Sergio Bayeh says he learned the hard way that purchasing used equipment from a disreputable seller could prove disastrous. One negative experience led him to prioritize quality and performance over cost savings. When buying used equipment these days, Bayeh targets remanufactured equipment that a credible company has stripped down to the frame, rebuilt with new parts and restored to its original specifications.

“If you’re going to put your trust in anyone (when buying used equipment), it’s safest to do so with a company that has a track record and one that can give a warranty,” he says. “Otherwise, saving a few hundred bucks just isn’t worth it.”

Chicago-based writer Daniel P. Smith has covered business issues and best practices for a variety of trade publications, newspapers, and magazines.