The installation of a commercial kitchen is an indispensable asset for food startups planning on professional-scale production. In the United States, businesses estimating that their business plans would involve a higher targeted growth are usually encouraged by experts to look into the investment, and plan on paying anything from $15,000 to $100k for their new commercial-grade equipment.
These figures already show that the stakes are high, and startup business owners need to think carefully before investing their money in such an endeavor. So what are the real factors that would play a major role in determining whether or not you should consider buying and installing a commercial kitchen?
The Cost of Equipment and the Size of Your Business
The most important equipment required for commercial kitchens generally revolves around three key aspects: ventilation, refrigeration and plumbing. Compared to the actual equipment you will be purchasing, the cost of the infrastructure itself will be far greater.
The ventilation alone can cost up to $10,000 per square foot of the hood area. At the same time, the plumbing installation required for hand, prep, mop and dish sinks may amount to an additional $10k, while the sinks themselves will only cost about a fifth of that amount.
The good news is that, depending on the size of your business, these numbers can be diminished. Moreover, with rented kitchen areas and readily installed equipment already in place and provided by companies like 4th Street Market at a fair cost, you can already upgrade your startup to a fully professional business within a few hours.
Renting vs. Purchasing a Fully Fledged Commercial Kitchen
Renting is one alternative to the complete installation of commercial equipment that you would own and service. To avoid the need for large capital, and take some of the risk out of your investment process, renting can be considered as a viable option, especially since the costs can be limited to about $10-25 per hour.
A full purchase may be a better choice in the long run, if you’re thinking of buying the latest equipment, and you already have the capital. Renting, however, is considered the more practical and sensible of choices for new startups, especially when keeping in mind that the demand normally associated with a commercial kitchen has caused equipment prices to spike in the past three years, while rental costs are reduced because of the growing number of food companies offering startups the opportunity to lease. East End Incubator Commercial Kitchens is a great example of a commercial kitchen rental opportunity that allows a fledgling food startup to grow without a huge cash outlay.
Should You Rent Your Commercial Equipment Now?
Even when renting commercial kitchens, you will still need a certain amount of capital as a buffer to avoid losing money before sales start picking up. Depending on your business’ growth rate, however, the amount you’ll be using from that buffer may be minimal.
To determine whether or not it’s time to rent and upgrade, consider these questions:
- Is business already booming, and your employees can’t keep up?
- Are you planning on using a highly targeted marketing plan that will leverage online and mobile demand and bring you more local customers?
- Would your estimated income allow for a generous margin of profit when it comes to calculating how much you’ll be paying extra for your new kitchen?
If your answers to these questions are a resounding “yes,” then it’s definitely time to think about upgrading to a full-fledged commercial kitchen featuring high grade, commercial equipment.