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.