Equipment Appraisal Blog | Understanding Machinery Appraisals

What's involved when appraising restaurant equipment?

Posted by Equipment Appraisal Services on Tue, Jun 05, 2018 @ 09:46 AM

When your world is your restaurant, your equipment is a vital part of keeping that world turning. Appraising restaurant equipment is a vital part of staying on top of your business' assets. But how does the appraisal process work with this type of machinery? By having a solid understanding of how the process works, you'll be able to better manage your restaurant's assets. Here's a quick overview of the process to help get you started.

 

What's involved when appraising restaurant equipment?

One of the first questions you'll often hear when trying to find an appraiser for your restaurant equipment is what is the reason for the appraisal? Many businesses don't understand why this is important, but depending on the situation, many appraisers are legally required to use particular types of appraisal methodologies. Typically this happens in a divorce, estate settlement or dissolution of a partnership where the court is involved in ensuring that both parties get a fair share of the profits.

Are you trying to find out the value because you've suffered an insurance loss? If you have equipment that required specific conditions to operate properly, such as water lines at a specific pressure, being bolted to the floor or similar factors that may need to be changed with the replacement or require significant work to remove, knowing the value of the equipment including the removal costs is important to ensure that your business is reimbursed for all the expenses related to the loss rather than just the cost to replace the machinery involved in the loss.

Another area of interest is whether the machinery is in good operating condition or if it has issues, such as a non-working burner, occasional leaks and similar problems. Because these issues can often limit the performance of the equipment in your restaurant, they can impact the overall value of the machinery, whether you're selling it or preparing your business for sale. When you work with an appraiser who has experience in the restaurant or food service business, they have a much better grasp of the equipment involved and how those factors can limit your production.

What about the equipment's expected useful lifespan? Because experienced restaurant equipment appraisers have extensive experience looking at a number of equipment options, they know the signs of failure for common models. If a piece of equipment is making a specific noise, the gears or belts have issues, it has signs of failing systems or similar issues, it's much easier for an appraiser to pin down the exact issue and determine how that will impact the equipment's useful lifespan. 

If you're considering using your restaurant equipment as collateral for a business loan for your restaurant, have you taken the time to have an appraisal performed to determine the machinery's equipment prior to signing the contract? Many financial institutions don't go to the depth and length of equipment values, because they work with a wide range of loans. Instead, the documentation is often written up with incorrect values that shortchange your company's true asset values.

Appraising restaurant equipment is a complex process and should be undertaken with the help of an experienced, certified appraiser. It's an important part of your business process because understanding how the process works can help you figure out how your assets change in value over their usable life. Make sure to work with an equipment appraiser who has experience in the restaurant industry.

Tags: restaurant equipment appraisal

How a Restaurant Equipment Appraisal Lets You Turn Up the Heat

Posted by Equipment Appraisal Services on Tue, Sep 27, 2016 @ 02:30 PM

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When you're in the restaurant business, change is inevitable. You'll need to change suppliers, update your menu and constantly train staff. But what about the big changes, when you're considering expanding your location or offerings, adding a new location or changing the direction and focus of your restaurant entirely? Though a restaurant equipment appraisal may seem like a strange way to manage the risk of these potential opportunities, it can actually be a great benefit - heres how:

How a restaurant equipment appraisal helps you manage risk in new ventures

  • Know your bottom line. One of the first places where restaurant machine appraisal comes into play is to help you determine the risk in taking a new venture or opportunity. A bit part of the decision is comparing your assets against your liabilities. But if your assets aren't accurately valued, you don't really know what that figure should be. Are your assets undervalued because they have additional features or are exceptionally well maintained? Are they overvalued because they need repairs or have seen excessive wear and tear? Having restaurant equipment appraisals completed helps you know exactly what your equipment, and by extension your asset accounts, are actually worth. This helps you make decisions to change your restaurant, expand it or open new locations based on accurate information and an accurate view of the risks involved.
  • Leverage your assets to help with business changes. Because a well-qualified and certified appraiser will have a particular methodology that he or she follows to determine the accurate value of your restaurant equipment, it provides legal documentation of those values. When you approach your financial institution about getting financing for your business' planned changes, having an equipment appraisal from a certified appraiser ensures them that you've done your homework and are taking the expansion - and their investment in it - seriously.
  • Consider whether the equipment will be an asset in a different direction. If you're making a large change in the direction or theme of your restaurant, some of the equipment will still be helpful while others may be put to better use somewhere else, allowing you to raise more capital to invest in your new venture. If you've run a buffet in the past and are changing over to a more traditional style of restaurant, steam tables and similar fixtures can be sold to invest in new furnishings and similar investments that will help you make the most of your new opportunity.
  • Get a better idea of how long the equipment will function effectively and efficiently. Because equipment valuation specialists look at restaurant equipment all the time, they have a good idea of how many more years you'll get out of the mixer you've purchased for your bakery expansion on your country cooking restaurant or the industrial-sized gas wok in your new Mongolian BBQ establishment. This also helps you decide which equipment to keep for your new venture and which to replace in the interest of keeping things running smoothly.

By having a restaurant equipment appraisal performed on your restaurant machinery, you can ensure that you know exactly where you stand and have the proof to back up your new venture.

Tags: equipment appraiser, restaurant equipment appraisal