Question

As the owner of a restaurant, you must make decisions about the location of your restaurant and the equipment and furniture needed to operate your restaurant. Would you prefer to buy or lease your building? Also, discuss whether you would prefer to buy or lease your equipment and furniture. What benefit do you see in your choices?

Answer 1

As the owner of a restaurant, I must give more importance while choosing the location of restaurant. Location also a determining factor of success of a Business. Following are the factors that I give importance while for Choosing a New Restaurant Location:-

1. Visibility
2. Parking
3. Space Size
4. Crime Rates
5. Surrounding Businesses and Competitor Analysis
6. Accessibility
7. Affordability
8. Safety

The next most important decision must be taken by a business owner is whether to buy or lease the equipments needed for their business. For example :-Building, furniture etc.

Leasing

Merits

• This method is good for equipment that needs to be updated often because you can acquire updated technology easier and quicker.
• There is less expense up-front with leasing because you have easy, predictable payments. You don’t have to deal with one large lump sum to purchase .
• Leasing is often 100% tax deductible
• Leasing is flexible and offers more options
• In leasing, we don’t pay for maintenance.

Demerits

• We may usually pay higher costs over time. Most leasing options require interest to be paid as well.
• We don’t own the equipment, so it gives absolutely no equity.
• The available length of lease terms may be longer than we need.
• Maintenance is up to the leasing company’s specifications, so it may be difficult to get things fixed.
• Availability of products may be limited depending on the stock of the leasing company.

Buying

Merits

• We own the equipment, so we can make any alterations necessary.
• We have the option to sell the equipment when we are finished with it, allowing you to recover some of the cost.
• There is tax incentives
• Buying is easier because don’t have to deal with agreements and contracts.
• Have complete control over what we get because we aren’t limited by a leasing company’s stock.

Demerits

• Have a higher initial cost
• For technology that is outdated quickly, we are stuck with it because we own it
• We are responsible for all maintenance, including costs.

                                                                       Finally I can said that, While taking a decision about buy or lease must consider the potential revenue derived from using this equipment, how quickly the equipment will be outdated, the size of the equipment and the overall costs. Each decision regarding equipment leasing or buying should be made carefully to best fit our company’s situation and needs.