Restaurant Equipment Leasing for Startups: Lease, Buy or Used

Restaurant equipment leasing for startups means paying a monthly amount to use kitchen equipment, instead of paying the full price up front. For a new restaurant, it can free up cash for the lease, build-out, permits and first inventory. It is not always the cheapest way to equip a kitchen, though, so this guide compares leasing, buying and used equipment to help you decide.

Babak Food Equipment’s team can discuss leasing and financing options with you as part of a quote, alongside new and certified pre-owned equipment. Here is how to think it through before you call.

Restaurant equipment leasing for startups: how it works

In a typical lease, a finance company buys the equipment you choose and you pay a monthly amount over an agreed term. At the end of the term, you return the equipment, renew, or buy it, depending on the contract type. Terms, rates and conditions are set by the finance company and depend on your business and the equipment, so we do not quote them here.

The most common structures are:

• Fair market value (FMV) lease. Lower payments, and at the end you can return the equipment, renew or purchase at its then-current value.
• Lease to own (sometimes called a buyout lease). Higher payments, but you own the equipment at the end for a fixed or nominal amount. This is what people mean when they search for “lease to keep” restaurant equipment.
• Equipment loan or financing. You own the equipment from day one and repay with interest. The equipment itself usually secures the loan.
• Short-term rental. Useful for events, pop-ups or testing a concept, but the cost per month is higher than a long lease.

Whichever you choose, read the contract for the total cost over the full term, not just the monthly figure. Ask what happens if you close, move or want to upgrade early.

Leasing vs buying vs used: a startup comparison

Most new restaurants end up using a mix of all three, so think about each major piece of equipment separately.

When leasing makes sense

• You want to keep cash for rent, payroll and marketing in the first months.
• The equipment is expensive and central to your menu, such as a combi oven, a dishwasher or a walk-in cooler.
• You expect to upgrade in a few years, as your menu or volume changes.
• You want predictable monthly costs for budgeting.

When buying outright makes sense

• You have the cash and the item is something you will use for ten years or more, such as stainless work tables, shelving and sinks.
• You want to avoid interest and fees.
• You want full control to sell, move or modify the equipment.

When used equipment makes sense

• You are building a tight budget and the item is simple and durable, such as stainless steel prep tables, sinks, reach-in refrigeration and shelving.
• You want to cut the upfront cost of a full kitchen without taking on a monthly payment.
• You are testing a concept before committing to top-of-the-line equipment.

See Babak’s used restaurant equipment category for certified pre-owned items, including used commercial refrigeration. Used items are inspected and presented as certified pre-owned, and details and condition are confirmed at the time of purchase.

What to equip first: a startup priority list

Start with the equipment that your menu cannot run without, then add the rest as sales grow.

1. Cooking line: cooking equipment that matches your menu, such as ranges, fryers and griddles, with a code-compliant exhaust hood where required.
2. Cold storage: commercial refrigeration and freezers sized for your deliveries.
3. Prep and storage: stainless work tables, shelving and food pans.
4. Sinks and handwashing: a three-compartment sink or a commercial dishwasher, and hand sinks as your health authority requires. See our 3 compartment sinks and hand sinks.
5. Extras: beverage equipment, ice machines and specialty items once service is stable.

In BC, you also need approvals before you open. Food premises plans are reviewed by your health authority before construction (for example Vancouver Coastal Health or Fraser Health), and gas appliances must be installed by a licensed gas fitter under a permit through Technical Safety BC. Build these steps into your equipment timeline, and talk to your authority early about what your plan requires.

Leasing considerations that matter to startups

New businesses can expect lenders to look closely at the numbers, and leasing is not automatic. A few practical points:

• Expect a review of your business. Finance companies usually look at your business plan, time in business, the owners’ credit and your financials. For a startup, they may ask for a larger deposit, a personal commitment from the owner, or a shorter term. Any offer that skips all review of your business is worth questioning.
• Total cost matters more than payment size. A low monthly payment over a long term can cost far more than the equipment price.
• Check who maintains the equipment. In most leases, repair and maintenance are your responsibility.
• Insurance. Leased equipment usually needs to be insured. Ask your insurer.
• Early exit. Look for what is owed if you close or sell the restaurant before the term ends.
• Tax treatment. Lease payments and ownership are treated differently for tax. Check with your accountant.

Babak does not make approval decisions. Approval and terms are decided by the finance company, and we cannot promise an outcome. Our role is to help you choose the right equipment and discuss options with you.

Rough startup equipment budgets

Many people searching for startup package deals want a ballpark. The ranges below are rough estimates for new equipment in Canada and vary by brand, size and spec. They are not Babak prices or a quote.

• Small cafe or takeout (limited menu): roughly $25,000 to $80,000 CAD in kitchen equipment.
• Full-service restaurant (50 to 80 seats): roughly $80,000 to $250,000 CAD.
• High-volume or specialty kitchens (combi ovens, large refrigeration, multiple cooking lines): $250,000 CAD and above.

Buying used or certified pre-owned items for the simple, durable pieces can lower these totals noticeably. Request a quote for current pricing on your equipment list.

How to prepare for a lease application

1. Write your equipment list. Include brands, models and sizes. A detailed quote speeds everything up.
2. Prepare your business information. Business plan, projected sales, lease or ownership of the premises, and recent financial statements if you have them.
3. Know your owners’ details. Lenders usually ask for information on the owners.
4. Compare more than one option. Look at payment, total cost, end-of-term options and fees.
5. Confirm the installation plan. Make sure your electrician, plumber and gas fitter can complete installation, and that the premises are ready.

Leasing vs buying vs used: summary table

Frequently Asked Questions

Planning your kitchen? Browse our used restaurant equipment and cooking equipment, visit the showroom at 7190 Randolph Ave, Burnaby, call (604) 566-9747, or request a quote and ask our team about leasing and financing. Pricing, availability, delivery and installation are confirmed at the time of purchase.