Someone once advised me that when you're in the restaurant business, change is inevitable. This was originally intended to mean the frequent need to shift suppliers, update your menu, and constantly train staff, among other things. Today it means a whole lot more than that, with the goal of survival and long-term profitability at the forefront for many restaurant owners due to the COVID pandemic. Kitchen, dining, and bar equipment, commonly referred to as FF&E (furniture, fixtures, and equipment) can assist restaurant owners with obtaining new capital, restructuring loans, and help expand a growing business.

A restaurant FF&E appraisal will support the value needed for these situations

Restaurant appraisals are commonly requested by banks and other lending institutions for owners, potential buyers and sellers when assessing loan amounts or restructuring existing debt. The value of your overall restaurant business probably has a small amount of that value on the books associated with the FF&E. As long as your equipment has been well maintained and is in good condition, an updated appraisal will most likely support an increase to the tangible asset component of your operation, and will, in turn, increase the overall value of your restaurant.

Leveraging these assets in conjunction with the value of your intangible goodwill can maximize the amount of capital you may be able to borrow in any of these financial situations.

When you are ready to get an FF&E appraisal for your restaurant, always seek out an experienced, accredited equipment appraiser, as their credibility, and that of the valuation firm they represent, goes a long way to supporting the concluded values estimated in the report. Most banks and lending institutions will require a fully documented and researched analysis as part of the valuation effort.

You can ask the appraiser to quote the work either as a visual on-site inspection or as a “desktop” appraisal depending on the level of data you have available for review and your cost budget. You should request the valuation be under a Fair Market Value premise, assuming the restaurant remains in operation, and potentially a more conservative orderly liquidation value if the bank is looking for a “best case, worst case” scenario.

By having a restaurant equipment appraisal performed on your associated FF&E, you can also better determine the overall value of your business if you decide to sell.

When you are ready to move forward on an appraisal of your restaurant FF&E, contact us at Equipment Appraisal Services. Our fully accredited and experienced appraisers are well prepared to provide you with everything you need.

You love to cook and host people at your restaurant, but sometimes the business end of your space can be frustrating. Even if you're handling your own accounting, do you know what it would cost to replace all of the items in your restaurant? Do you have sufficient insurance coverage if you have a kitchen fire or flood? One way to determine whether you are able to replace any or all of your restaurant's property and equipment is by having a restaurant personal property & equipment appraisal performed. Here's a look at what kind of items will be appraised during the process.

What's Covered in a Restaurant Personal Property & Equipment Appraisal?

Your restaurant has a lot of different types of property, property that can suffer losses in a number of different circumstances. Flooding can damage your tables and chairs. A fire can damage or destroy the equipment in your kitchen. Either of these circumstances can impact your real estate values, if you've chosen to purchase your business property rather than leasing it. You may have insurance to cover these losses, but how do you know how much insurance to carry in the first place to cover these different types of property?

You could start by looking at replacement value. How much will it cost to replace the equipment that's in your restaurant's kitchen? How much will it cost to try to source and replace the hand-carved chairs in your dining room? Will you need to purchase new items, or can you easily find the items you need second-hand to help reduce the cost of replacement? How do you know what these values are in the first place? The easiest approach is to have an appraisal performed on your restaurant's equipment and personal property.

When you have these items appraised, you can get a better idea of how much insurance coverage you may have. On some pieces of equipment, you may have already fully depreciated the equipment to follow a particular tax strategy, but that equipment will continue to deliver value for your restaurant for many years to come. Because you don't have to replace that equipment, it continues to have value for your business. If you were to suffer a loss due to flooding, fire or another occurrence, you would then need to pay money to replace the equipment. As you can see, basing the value of your restaurant's equipment and personal property on your tax accounting records can leave you far short of the claim you would need to file with your insurance company in case of a loss.

By having a restaurant personal property & equipment appraisal performed on your business' material goods, you can ensure that you have sufficient insurance coverage in case of a disaster. You can also use the appraisal to leverage the value of your restaurant's equipment and personal property to help secure financing, fight a property tax assessment that is incorrect or proves the value of your restaurant in court proceedings. However, to get accurate calculations, you'll want to make sure that you're working with a certified equipment appraiser. The certification process ensures that your appraiser has had training in standardized methodologies that will hold up well to strong scrutiny.