Should I Rent or Buy a coffee machine?
Ok you are here because you know you want a coffee machine. Congrats! Good coffee is not too far away. The next decision is "Should I Rent or Buy the Coffee Machine"?
So should you rent or buy it? The good or bad news (if you were looking for a definite answer) is there is no right answer. What it really depends on is your own situation among other factors.
There are certain scenarios where one option is more suitable than the other. So let's explore each option in more detail and hopefully you will have a better understanding to make your decision.
Advantages and Disadvantages
The main advantages are;
1. Costs
2. Service
3. Complete package
The main disadvantages are;
1. Costs
2. Independence
3. Lack of choice/availability
Costs can be an advantage and disadvantage. Thats because initially your costs are usually low to enter a rental agreement. Depending on the terms there might be a small deposit or no deposit and you only have to pay one months rent. Thats attractive to any business especially one with a limited budget. However costs can add up quickly as the months and years go by.
An example of this is taking a simple figure of €150 rent per month and say you rented the equipment for 8 years. €150 x 96 months. = €14,400. Rent can become very costly.
If you were to compare this to a good 2 group machine package of €4,000 for a new machine then renting looks very expensive.
Most companies will have a minimum term and will enter a rolling agreement after the set amount time so its quite easy to rent much longer than the initial agreed term.
Starting any business or upgrading your machine is no doubt costly. Renting capital equipment at a monthly cost can be advantageous as it does not require the large capital outlay. However I would only recommend it as a short term solution and if your plans are to be in business longer then 1-2 years then I would always recommend investing in purchasing a coffee machine. If you are looking for any advise please feel free to email us info@coffee.ie and we will be glad to help.
Service is usually included in the rental package. Again this is attractive to someone new to coffee machines. Horror stories of machines constantly breaking down can entice people to look at renting for solely this reason. However choosing equipment with a solid reputation and a company with a proven record of after sales care over equipment with questionable one will alleviate this.
The reality is coffee machines like FAEMA that are well built and maintained do not cause service issues. Annual service costs, especially on new equipment are low.
Also beware as Service is a blanket term and may not necessarily cover every element like changing a water filter, limescale damage or even an accidental damage (For example a staff member may spill water or coffee on top of the machine which could cause electrical faults like the main cpu board or keypads requiring a service that may not be covered.
Complete Package-with rental agreements usually it includes much more. Many who are new to coffee machines may assume all you need is a coffee machine. However specifically when talking about a traditional barista coffee machine you will require a coffee grinder, barista accessories-Milk pitcher's, Knock drawer, Tamper, Tamper Mat, Cleaning products etc. A water filter may also be included along with staff training and other items.
Independence Under a rental agreement usually you are tied to a supplier to purchase coffee, tea, cups, sugar etc all at a much higher cost than what they would be if you owned your coffee machine. So by renting you are losing you independence to really choose your own Coffee.
Let's take the above example again. Say you rented for 8 years (96 months) and for those 96 months you purchased 2x cases (12kg) of your coffee at €18 per kg per week on average. What you may not be aware the same coffee could be supplied to you at a much lower cost. Why? Well you own your equipment so now all suppliers are in a competitive position and may lower their cost to off set service and equipment costs etc. So you can get the same coffee for €16 per kg. That's €2 difference per kg. That may not seem like a lot. Sure its not even the price of a cup of coffee. Let's do the maths.
€2 x 12kg = €24 (The difference it costs per week)
€24 x 52 weeks (The difference t costs per year) = €1,248 per year
€1,248 x 8 years = €9,984 (The difference it costs after 8 years)
Think 8 years is a long time? 8 years ago today was 2013 (The car parked in your driveway may be older)
Bottom line it you decide to rent for a set term under a rental agreement. Initially this can seem attractive, however if you decide the company you are dealing with are no longer a good fit for whatever reason, unfortunately it can be difficult depending on the terms you agreed to get out of it. Also costs build up on both the equipment and cost of products quite quickly. If you decide to purchase you own the machine and are independent from all coffee suppliers
Lack of choice/availability When you decide to purchase you have choice, lots of choice as there are so many machines available on the market. Some with really neat features and specs that older models do not have. However when you decide to rent, almost always the equipment is not new, not even close. Most machines on average are already over 5 years old or more and you don't have a choice, It's up to the discretion of the company what to offer you.
If you business out grows your machines capacity your forced to stay with it or re-invest with an upgrade.
Basically it all comes down to whether or not you actually want to own you machine or not. My advice, spend time doing some research on what machine is suitable and has performance to be capable if your business grows. Go see the machine in action, you never would buy a house or a car without actually seeing it first.
Still undecided? Give us a call or email and we will advise you for whats best for your situation.
Click to find out more about our rental packages here
Matt
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