Counting the cost

Few would ever admit to buying anything on price alone. Everyone claims that performance and reliability take precedence over price in their buying decisions. But does this really hold true when it comes to buying professional catering equipment?

Of course, price comes into the buying equation with performance and reliability, but it frustrates manufacturers when an operator will haggle over a few pounds on something that is destined to last years and repay purchase cost umpteen times over. A lot of catering equipment is cheaper in real terms today than it ever was, yet too many caterers still let their pockets rule their head. The popular myth is that a fridge is a box with a compressor and a deep-fat fryer is just a smaller box with a basket, and the only thing that separates all fridges and all deep-fat fryers is the price.

The smart way to buy catering equipment is not simply to study purchase cost, but to do a calculation called whole-life cost. That means taking purchase cost, operational cost, maintenance cost and life expectancy and setting that against performance and profit potential.

it Pays for itself

As an example, Lincat recently launched a 900mm-wide electric griddle that can cook up to 290 quarter-pounders an hour. It's unlikely that the griddle would be used at full capacity for extended periods, so let's assume an output of 100 burgers an hour over a six-hour period each day. Assuming a selling price of £2.50 and a gross profit margin of £1.20 per burger, the griddle can deliver £120 profit per hour, or £720 in a six-hour day. Our list price for this griddle is £560, but with a bit of gentle haggling you're likely to pay around £450 from a dealer. So it doesn't take a mathematical genius to work out that the griddle can pay for itself in less than a day.

There are overheads to think of, and the net profit margin might be as low as 5%, but the griddle will still deliver a net profit of £75 per day. On this basis, it covers its cost in six days. Yet there are still operators who want to buy some obscure brand from a leaflet that falls through the letterbox because it is £50 cheaper than all the quality griddles out there.

There are several ways in which that £50 saving will rapidly disappear, not least of them in servicing or after a breakdown. Commercial catering equipment is sturdy, but reinforced concrete it is not. The most common howl from a caterer who has gone the cheap-and-cheerful route is that they can't get spares. Or if they can, the spares have to come from halfway around the world and cost an arm and a leg. The internet is very good at shaving a few pounds off the purchase cost of new goods shipped across continents from a warehouse.

However, internet and mail-order bargain offers are truly bad at providing spares. Try phoning or e-mailing the manufacturer to order a spare part, and the chances of it arriving within even a couple of weeks might be optimistic. If the caterer had bought a recognised brand through normal distribution lines, it is likely the part would arrive within 24 hours.

So that cheap griddle is lying dormant for two weeks, when the slightly more expensive alternative might be out of action for just a day. What's the net result if your kitchen is working seven days a week? Here comes another maths lesson: a loss of profit of £720 x 13 = £9,360 gross. The figures speak for themselves, and the message is clear: don't just look at the price tag; think about the whole-life cost as well as profit and performance. Buy from a reputable manufacturer, based here in the UK: not out of some altruistic sense of national pride, but because it makes good sense for your business.

Nick McDonald is marketing and export director at Lincat