In my previous posting, I covered how to build out your coffeehouse
cheaply, using creative construction, materials from Craigslist (and other
similar sources), and avoiding major renovations.
In this segment, we will cover how to get equipment for
cheap.
First - getting NEW equipment for cheap. Usually the best place to get brand new
equipment for very cheap prices is expos, equipment fairs, barista competitions
etc. I once picked up a brand new
$12,000 espresso machine for $6000. I was
at a coffee expo, and Rancillio there with a booth. They
were demonstrating their new machine to people, so it was plugged in and
operating. Now, once a new machine has
been used, it can no longer be sold as 'new'.
Likewise, the dealer doesnt like to use the same machine for every expo,
because the machine gets dirty, it is difficult to find space to store,
maintain etc. Instead, they usually
unbox a new machine for every event.
Thus, they are left with a "used" machine that has been used
for less than a week... They just want
someone to come and pick it up so they dont have to deal with it.
Near
the end of the expo, I stopped by the Rancillio booth, and offered to drop by
after the expo was done and take the machine off their hands for $4000. We went back and fourth a couple times, and I
eventually agreed to $6000. Voila - a new machine for half price.
Any time there is some kind of demonstration, expo etc -
where new equipment is being used for a very short amount of time, you can bet
the company will be willing to sell it to you for a steep discount - just to
get it off their hands so they dont have to deal with it. Bring
a truck and a wad of cash (cash talks loudest).
Second - used restaurant equipment: Let me start by outlining the broad structure
of the restaurant equipment market. As
you probably deduce, restaurant equipment is designed to last a long time with heavy wear. At the same time, there are a surprisingly
large number of restaurants and other food establishments that fail early on in
their lifespan - one study suggests a 60% mortality rate within 3 years of
launching. Thus, you have equipment that have only been
used for a couple years of their six to ten year lifespan, resulting in a large
amount of used restaurant equipment floating around the market.
There are many used restaurant equipment purveyors that buy
the stuff from shuttered restaurants, clean it up, fix it up and resell it for maybe 50% of the brand new stuff -
just do a google search for 'used restaurant equipment' in your area, and I'm
sure you'll come up a half dozen companies that do this.
Likewise, you can always find used equipment on Craigslist
and Ebay - just keep your eyes open and pounce when one comes up. For craigslist - the best ones to go for are
the ones with no pictures. These people
usually have no idea what their equipment is worth, and the statistics say that
a Craigslist ad without a picture has 30-40% fewer respondents - fewer
respondents translates to fewer people calling about the equipment, which in
turn strengthens your negotiating hand.
For a reasonably good piece of equipment (in good shape), I'd expect to
pay about 1/3rd the new price when buying used off Craigslist and Ebay.
Now, how to get restaurant equipment for REALLY cheap: restaurant equipment auctions. Whenever a food establishment goes out of
business (or creditors repossess the shop), the owner will call an auction
house to auction off the contents of the place.
This is where the used equipment dealers go to get their equipment for
resale. You can get some phenomenally
good prices.
I usually check Craigslist (business section) for auction
listings, or just do a google search for restaurant equipment auctions to see
what comes up. These things are going on
all the time, so they are not difficult to
find.
Auctions are a bit more tricky, because the equipment is usually
sold as-is, where-is... and you have to provide the full amount you bid there
and then. It feels a bit wild-wild
west. Unless you are a restaurant equipment
specialist, it is difficult to ascertain whether a piece of equipment is good
or ready to break (you can usually turn it on to check if it actually
works). However, the way you deal with this is to just
bid low enough on it, that if something does turn out to be broken, you can get
it fixed and still end up with a good deal.
Likewise, you must remove the equipment from the store yourself, and
then transport it back to your place. Just
a word to the wise here - the other bidders often do sneaky things to throw
other you off ... make it seem like the equipment is broken etc. For example, one auction I went to, someone
went around before me and turned the thermostats up on all the refrigeration
units (and freezer units), so when I came by to check them out, they were
blowing warm air (usually a sign the compressor is bad). When I noticed the thermostat and turned them
back down, the refrigeration unit worked just fine. I
also saw one bidder turn on a meat slicer to check that it worked, then surreptitiously
cut the cord and pocket the plug, so no one else could check to see if it works
(rewiring the plug is a simple procedure).
This way, when the bidding started, he was the only one who knew it
actually worked - the rest of the crowd only knew that the cord was cut...
Some newbies are intimidated by auctions, because you are
surrounded by used equipment dealers who do this sort of thing for a
living. They know the actual value of
everything, and what things cost to fix, the bidding procedure, strategy etc
etc. However, you have a huge leg-up on
these folks.... simply put...price. They
are buying equipment to resell - so they HAVE to buy it very cheaply. You are buying equipment to use, so you can easily
bid above them, and still get an amazing price.
If you want to try your hand at an auction, here are the
steps you need to take:
1. figure out the equipment you need.
2. Look up the equipment online - both new and used prices
of various brands. Get a good idea what normal
prices are for this kind of equipment.
3. At auctions, I usually expect to pay 10-20% of new price
for the equipment (depending on the item - the more popular items like sandwich
making stations, slicers and stand-up refrigerators may be closer to 25%,
whereas large convection ovens can be snagged for 5-10%). This
will give you a rough idea of what you should expect to bid up to.
4. You can usually pick up your equipment for a day or two
after the auction, so you dont need to rent a u-haul truck to go to the auction. You can grab that later (when you have a
better idea of the size of the truck you are going to need). Also, bring a bag of cash. You can usually use cash, check or credit
card for the purchases, but most places will give a 2-3% discount for
cash. I went to one auction and got
$4000 worth of equipment, then paid in cash.
The guy knocked 3% off the price, thus saving me $120.
5. Auctions are best used if you are getting a bunch of
equipment. If you are getting just one item
- it may not be worth it (unless that item is expensive). Once you factor in your time, truck rental
(gas), hiring a couple guys to help you move it, possible fixing etc - it may
not be that much cheaper than buying from a used restaurant company. So, if you are going to go to one of these
things - plan on buying a bunch of stuff.
I like to buy back up equipment for my vital pieces (under counter dish
washer, ice machine, refrigerator, espresso machine etc) so if they go badly
wrong, I can just yank them out and put the other piece in.
As an aside - the WORST time to buy equipment is when you
absolutely need it. When you need it
NOW, you will pay the most money for it.
Grab some back up equipment for your shop and stick it in the basement
or a garage, so you have it there for when an emergency strikes.
Here is how the auction works: usually the auction starts around 10am, but
the shop is open for inspection a couple hours before-hand. You
get there around 9am, and sign in. The
auctioneer will take your information and then give you a card number. This is your bidding card - keep it
handy. Next, walk around noting all the
equipment, and what they look like. Try
and turn everything on to check that it works (and watch out for
tricksters). Make a list of the things
you want to bid on, and write next to it what your max bid will be. This is important, because in the excitement
of bidding, you can easily lose your head and bid way above what you
should. If you have your max bid in
front of you, you are less likely to over bid.
I always look for dirty equipment - you can usually get the best deals
from dirty equipment. Most people
intuitively believe that dirty equipment is worth less - just because it is
dirty. This is crazy. When a
restaurant is going out of business, employees and owners spend less and less
time on general cleaning, upkeep and maintenance, so things tend not to get
cleaned. So, focus on the dirty
equipment to get the best deals.
When the bidding starts, the auctioneer and his buddies
(spotters) herd everyone over to the first piece of equipment. They start the bidding out at some arbitrary
price and the auctioneer starts his fast-talking patter (250 250..do I hear 270
270 270... etc) If you will take that
price, you wave a hand, cock an eyebrow or some positive motion, and one of the
spotters will point at you and yell "got" or somesuch to signal the
auctioneer to move to the next price up.
If the price is too high, and no one is bidding, the auctioneer will
actually step the price down.
There will be two types of people there: people like you (restaurant/cafe owners
looking for cheap equipment) and dealers.
Dont worry about the dealers - you can always outbid them. You need to be mindful of the other
restaurant owners. See if you can
befriend them. If there are only a couple
of you, see if you can come to some side deals - find out what they want and tell
them what you want - then cut a deal instead of bidding against each
other. For example, if there is a
sandwich making station, a refrigerator, an under counter dishwasher and an ice
machine there that two of you want, you could offer NOT to bid on the sandwich
station and refrigerator, if they pledge not to bid on the dishwasher and ice
machine. Obviously the auctioneer wont
like this, but he cannot stop you from talking with the other people there.
There was one auction I went to that had two 'bakers tables'
at auction- these tables are 4' x 8'
with chopping block surfaces. Very
valuable tables for bakers... and very expensive. A good quality table will sell for several
thousand dollars. I
wanted one, and one other guy was bidding against me. I didnt know if he wanted one or both of the
tables, so in the middle of bidding, I quickly asked him - "you want one
or two?". He lifted one finger at
me and I immediately dropped out of the bidding. I managed to get the second table for less
than he paid for the first.
If you are going to bid - dont
bid in at the beginning. Wait. let the others bid up and drop out. Once everyone else had dropped out, THEN you
can drop in. This tends to keep the
prices lower.
Strategy: You are allowed to bid in at any price you
want. So, if the last bid was for $350,
and the auctioneer is calling for $375, you can yell "$355" and the
auctioneer will accept that. However, I
would not recommend that. Going up small
increments tends to encourage other bidders to stay in the race. If they put in the bid at $350, and your bid
is just $5.00 more, they will be LOATHE to lose the bid due to just $5.00...
they will likely be goaded into increasing the bid.
Most people stop bidding at
certain monetary thresholds - usually x00 numbers or x50 numbers (such as $200
or $250, $550, $700). They have set a
mental threshold beyond which they will not bid. So, if an item is at $300, and two guys are
still in, chances are good that one will stay in to at least 350. SO, if you just bump the bid directly to 350,
that will tend to drop one from the running right off. Furthermore, such a large increase shows the
other bidder your intention to win the bid... and at that point, he will have
to bump up his bid at least $60 to be considered - a much larger obstacle than
just the $5.00 previously mentioned. So, dont be afraid to play around with bidding
increases. Think strategically.
I recently went to an equipment auction in New Bedford,
MA. A
Big Y store (a big grocery store chain) had closed, and all the
equipment in the store was up for auction.
It was an interesting experience. I ended up getting a truck full of coolers,
tables, shelves, etc for a mere $4000. Had
I purchased this equipment new, I would have paid close to $20,000. It was an all-day event (and I had to make
two trips, because my truck was too small), but it was worth it. Enormous savings.
Thanks for reading!
Let me know if you have any issues or questions you'd like me to
address!
Duncan
Coffeehouse Guy
On a final note: as you may know, I'm in the process of writing a series of guides to show people how to move from a corporate job to owning a coffeehouse. Unfortunately, they are not going to be ready for a little while. However, If you are REALLY serious about starting your own coffeehouse, and you cant wait for my guides to come out, I also offer a 2-day, one-on-one intensive boot camp on starting a coffeehouse. You come up to New Haven for these two days, and we spend two intensive days going through all the intricacies of starting, owning and operating a successful coffeehouse. If you are interested, send me an email and we'll get it set up: coffeehouseguy1@gmail.com
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