Things tend to happen quickly in the restaurant industry, and we’re not just talking about how busy it gets on a Friday night. While some restaurants can survive as a single location for 50 years or more, the restaurant industry as a whole is much more volatile. It seems that the Mexican restaurant closes down and is barely out the door before the new vegetarian restaurant opens up. A restaurant you thought you discovered as a local favorite might open up three more locations in the next town over, maybe even taking over existing restaurants. A national chain might have a severe setback, necessitating the closure of franchise locations that need to be sold. The fair market value of the restaurant equipment will need to be assessed in each of those situations, and that’s where restaurant equipment appraisals come into play.
While the sale of a restaurant might be the most common reason that equipment appraisals are needed, it’s far from the only thing that causes people to call us up for professional used food processing equipment appraisals. Let’s take a look at why our clients call CMEA for restaurant equipment values.
Equipment Switch Out
Let’s take that first situation we discussed above, where one restaurant is purchasing another yet changes food styles completely. In most cases, the new restaurant is probably purchasing or leasing the building because of the location and layout of the restaurant (specifically the fact that it has a kitchen, an ordering counter, and a dining room).
If the new restaurant purchased everything outright, they suddenly has a lot of equipment that they won’t need. Yes, both the vegetarian restaurant and the Mexican restaurant serve(d) beans, but the new owners probably won’t need the tortilla press. They may use the grill, but have no use for deep fryer. If that’s the case, some of the cost of their new equipment can be offset by contacting a restaurant equipment appraiser so that they are getting fair market value for their equipment.
Selling Old Restaurant Equipment
Sometimes a restaurant goes through a remodel or simply wants to upgrade their restaurant equipment. The good news is, even old and partially working restaurant equipment can have value, but you want to make sure that you’re getting the right price for restaurant equipment. A fair market value by a professional equipment appraiser is the best way to ensure you’re getting the most from your gear.
Donation of Equipment
If you’ve upgraded to new restaurant equipment and don’t know what to do with the old stuff, you might simply decide to donate it to the local mission that feeds the homeless. But if you decide to claim it on your taxes (which you’ll probably decide to do, since the donation is considerable), you’ll want to make sure to get a certified report regarding the fair market value. If you don’t, the IRS can question it and cause you quite a bit of hassle trying to prove, retroactively, how much the equipment you donated was worth.
Changing Business Partners
Sometimes business partners are done working with each other and wish to split. Sometimes it’s because one partner is retiring, or simply tired of the entire restaurant rigmarole. Other times they might want to simply stop working with their partner and go off to start up their own business.
No matter the reason for one partner to buy out another, it’s vitally important that a restaurant equipment valuation is done. This gives both people peace of mind that the deal is fair, and any negotiations can be made from a common price.
There are many legal situations in which used food processing equipment appraisals have to be established. Divorce is one of them, of course, as assets have to be tabulated before an accurate split can occur. Estate planning is another, because wills and trusts often require a complete valuation of the restaurant(s) in question. The death of the owner and the transition to any inheritors will also trigger the need for restaurant equipment appraisals so that appropriate taxes can be calculated.
If a restaurant wants to remodel, they will very likely seek out a loan from a bank or other financial institution. In most cases the bank will be requiring collateral, and that may well be the restaurant itself. If that’s the case, the bank will almost certainly require an appraisal be done on all assets, including the restaurant’s equipment, to ensure that the collateral is worth enough to cover the loan.
Contact Us Today!
At Capital Machinery and Equipment Appraisals, we’re ready to give you the level of service you expect when it comes to fair market value of restaurant equipment. While we can certainly fly anywhere in the world to perform a summary appraisal, it might make just as much sense if we do a desktop appraisal (online equipment) appraisal. With a desktop appraisal, you provide the information to us, including the make, model, year of manufacture, and expected life left in the piece of equipment. We’ll send you back a report with the fair market value. Desktop appraisals are a great way to get the information you need and save your business money at the same time.
Do you have more questions about our restaurant equipment appraisals, or know that you’re ready to get the process started? We look forward to working with you, so contact Capital Machinery and Equipment Appraisals today!