Customers often ask us “what’s the key differences between leasing, renting, or purchasing a commercial coffee machine?”, and specifically “will I get more support if I lease a coffee machine?”
The answer to the last question is ‘no’ but to unfold that response, we will compare the 3 most common methods of acquiring a commercial coffee brewer – rent, lease or purchase – including both the advantages and disadvantages of each. Once you are aware of the benefits and constraints of each option, you can make an informed decision on the three types of purchase methods.
Before comparing the three areas of focus in question, it is important for you to first get a clear impression about what each of these services encompass and, to consider all other elements of the process which we will look at later on.
Should you need further help comparing the options and discussing your own specific requirements, please contact us and we’ll be glad to help.
A closer look at Rental, Lease and Purchase options
Renting a coffee machine means that is loaned to you for a predefined period. You pay a monthly fee for the use of the machine, but you will never own it. Ownership of the coffee machine remains with the company you have your rental agreement with. Usually, installation, maintenance and servicing come as part of the agreement, and there is an option to extend the agreement once the predefined period has finished.
In addition, signing on to a coffee machine rental agreement includes a training and cleaning programme to guarantee the proper operation of the machine by the users.
Flexibility is a main factor to rental, as you can rent a particular model for a short period of time and assess whether it works well for you and or the demand, or whether another model is more suitable.
The cost-effectiveness component of having a rental agreement, as the total cost of the coffee machine is spread out into manageable monthly payments. There are generally no big deposits to pay, or commitments and it also means you can bypass the need for external finance and leasing companies resulting in a more competitive deal. It is tax advantageous as well.
Further advantages are the service and maintenance of the machine as this is often included in the rental deal and means that they will look after the service and maintenance elements. Rental options can also include helpful regular coffee deliveries on your behalf.
At the end of your rental period, you have no opportunity to buy the coffee machine, and it must be returned to the provider. Continuous rental over a period of many years can work out a more expensive option, therefore not the most profitable in the long run.
Leasing is a popular way of funding business coffee machines. Provided by banks and leasing companies, the capital is broken down into instalments. Leasing a coffee machine is similar to renting a coffee machine with the only (but big) difference of you optionally owning the coffee machine after a predetermined period.
Generally, a coffee machine lease would not include a free maintenance plan which you would receive when you rent a coffee machine. To summarise this option, you pay a deposit upfront and monthly instalments to pay off the cost of the machine. At the end of your leasing agreement, you have the option to take ownership of the machine, upgrade it, or return it.
An advantage of leasing a coffee machine is the efficiency of the lease agreement. For example, the transition to upgrade or purchase the coffee machine at the end of the predefined leasing period becomes easier.
Another advantage of leasing your coffee machine is having new equipment, when you need it, and giving you the provision of spreading the cost.
There are also tax benefits, as it is not an asset owned by you, so it is tax-exempt. If you are VAT registered, you can also reclaim VAT on the agreed monthly repayments. The extra money saved can be used to reinvest in other areas of your establishment.
Similarly, to renting, a disadvantage of having a leasing agreement may be that it is more expensive in the long-term, compared to buying the machine outright.
There is a possibility that you could also be required to pay penalty fees if you want to terminate the contract earlier than the agreed end date.
With leasing there is normally no service and maintenance cover as this is your responsibility. There is no room for payment negotiation if things go wrong with your coffee machine, as banks and leasing companies are only interested in collecting the money owed.
Buying a commercial coffee machine is the simplest of all the options with you owning the machine from day one. Purchasing the coffee machine means you pay for the machine in one lump sum upfront, and you have sole ownership of the machine. Usually, the coffee machine will come with a limited guarantee but can have extended warranty and service plan.
Buying your coffee machine outright gives you full control over what machine model you want to buy, as you are not restricted to choosing within the range that have the rental and leasing options.
Less paperwork involved as you are not required to go through any financial checks, and there are no contractual obligations.
The initial investment can be deducted over time through depreciation in your tax returns, but it is limited to capital allowances on purchase. Buying a coffee machine is a good option if you plan to hold onto the machine for an extended period of time.
Although there is typically a 1-year guarantee with any newly purchased machine, as with leasing, there is usually no servicing and maintenance included in the initial overall payment. Should your new machine breakdown or have any faults, after the guarantee period, you may potentially have to pay to get it fixed and for any required consistent maintenance.
Buying a coffee machine means you need to invest a large sum of money from the onset.
Although it can cost less in the long-term, if your requirements change and you need a new machine, you will have to pay out again.
What type of coffee machine do you require?
Back to the ‘other elements’ we spoke of earlier. Possibly your first step (if you have not already arrived at it) is what type of coffee machine do you require?
Whether you need to upgrade the coffee production of your establishment, improve the guest experience in your hotel, improve profits in your café or simply cater to the personal tastes of the office (and in doing so improve your staff morale), choosing which type of coffee machine is best suited for your business or workplace is probably the first step in the process.
There are for example Commercial Traditional Espresso machines, Commercial Filter Coffee machines, Commercial Bean to Cup machines, Commercial Bulk Brew Coffee machines, Commercial Instant Coffee machines, Commercial Coffee Grinders… the list goes on!
To help you through this step, why not see our section on Commercial Coffee Machines to see what we offer and to help you choose what is most suited to your establishment?
For the end-user, all that most coffee lovers have to do is choose what their palate desires, although even that is getting more complex with the endless creations on offer these days!
Whether you are the business owner or are in the role of making the decision to provide the best overall experience (in the form of what coffee machine your establishment should invest in) to keep clients and or employees happily satisfied, we will endeavour to make the whole process as simple as possible for you.
So, should you rent, lease, or purchase your coffee machine?
As we have discussed, all three options have their pros and cons, and making this decision will be based on your budget and how you plan on utilising the coffee machine.
Consider which option would work best for the environment it is needed for?
Many people start with renting a machine, and once their business has grown, they opt to extend their contract. Many prefer to lease as they want to continuously upgrade their machine without being tied down to a specific model, whilst some want the feeling of ownership with the machine and prefer to buy it outright.
At the end of the day only you have the knowledge of your own establishment, so take this guide and apply whichever route-to-acquire is the best choice and most fitting for you.
The team at Caffia is always available to advise, guide and assist you with solutions that will meet your requirements – whatever they are.