Replacing a piece of foodservice equipment may be a common activity among operators, but the factors surrounding these purchasing decisions are anything but typical. With that in mind, this article explores the steps operators and their supply chain partners can take to make informed decisions.
A piece of equipment breaks down. You replace it. That's all there is to it, right?
Replacing an item presents an important opportunity not just to buy a new piece of foodservice equipment but also to revisit other pieces in the kitchen and the operation's overall design and setup, to refocus spending goals, and to consider new investments and improvements. A replacement purchase also involves taking a look at the current menu, preventative maintenance plans, equipment repair records, and relationships with dealers, consultants and service providers. In the case of noncommercial foodservice operations, it could present an opportunity to balance capital needs with service and other allotted expenses. In short, specifying replacement equipment can entail an entire operational analysis.
Replacement sales seem to be on the rise these days, industry veterans say. Perhaps that's because there are fewer new-build projects and more revamp projects. And many operators are approaching the 10- or 20-year mark for some of their facilities, which means major equipment pieces are beginning to reach the end of their service lives.
"All replacement sales begin with an item that is giving the operator some trouble and they need a solution — or something new," says Charlie Cuyler, sales engineer for Hotel and Restaurant Supply in Memphis. Cuyler works with many hotels and hospital accounts. "This is a chance for me to discuss with them whether they need a new part, a pure replacement, or they want some added benefit, and in that case they would need an upgrade."
First, though, when is it time to replace equipment? Generally the rule of thumb is to replace equipment when the service calls begin to exceed regularly scheduled maintenance visits, according to Paul Toukatly, partner and service manager with Duffy's Equipment Service in New York and a member of the Commercial Food Equipment Service Association (CFESA) board of directors. And just like with a car, when the costs of service skyrocket or major breakdowns occur, that's the time to consider whether added service or even parts replacement is worth it.
Generally when the equipment fails to hold temperature and do its job, it's time to consider a replacement. Like Cuyler pointed out, older equipment models often need to be replaced with entirely new models if the operator is looking for upgraded performance or has other needs (more on that later).
Beyond these instances, visible signs of deterioration such as rust, water damage and deposits, and loose coils and gaskets can indicate age, Toukatly says. For a more complete rundown of signs that different pieces of equipment need to be replaced, visit FE&S' website and scroll through the "When to Replace" e-newsletter archives.
Once operators have determined it's time to replace or upgrade equipment, many will take this opportunity to look at other pieces.
"Everyone, within a year or two, should reevaluate every piece of equipment they have," says Tom Galvin, FCSI, president of Galvin Design Group in Orlando, Fla. "Now, do they do that? No." Galvin is joking here, but seriously speaking, he adds, this process doesn't have to be a complicated matter. Taking a quick look at equipment service records for red flags, thinking about whether it's time to change menus, doing an honest evaluation of kitchen performance and even tracking sales records — these are ways operators can make sure they're on track with their goals, and replacing equipment or parts offers a great excuse to do so.
Focus on the Menu
Prior to purchasing any new piece of equipment, the operator must determine — often with the help of the consultant or dealer — whether the new item will throw off the current menu production and operational flow.
Specifying something completely different than the former model can add or detract power from the space, causing a domino effect that impacts other equipment in the kitchen. So it is important to understand the physical requirements — space, utilities and the like — that a new item will require.
"The danger is that their entire menu and their chefs and kitchen staff are geared toward the original piece specified," says Galvin. "Now that replacement equipment doesn't respond the same way in the field." This can lead to excess food waste, poor operational performance, and more wasted energy even if energy-efficient equipment is selected.
It works the other way around, too. When developing a new menu, it is a good idea to analyze the existing equipment lineup. "If their menu is changing, they have to make sure they are selecting the proper equipment for any replacements," Galvin says.
Scott Taylor, sales representative for TriMark United East and FE&S' 2011 DSR of the Year, also goes straight to the menu for analysis when helping operators with replacement purchases. "If you do a lot of sauté work, you should start with your range because that's the piece of equipment you use most," Taylor says. "If your whole menu revolves around one type of equipment, you need to focus on that." That means even considering the size of the new equipment to make sure it will fit within the same space that was allotted for the original piece.
If the original piece fits into a very specific 34-inch space, that could narrow the purchase options, Taylor says. It might also mean it's time to look at the line in its entirety to make decisions about moving things around and replacing more than one piece, especially to support a new menu or menu items.
If replacing multiple pieces at a time is not an option, prioritize and shop smart. "A lot of our customers' kitchens need upgrades, but they can't do the whole thing at once," says Taylor. A great compromise then is to look for multiuse equipment that can produce different menu items and save space at the same time.
"I had a customer recently who wanted a new charbroiler and a salamander, but he couldn't afford both," Taylor says. "So I looked for one that had both included — I found a model with a pullout broiler that could handle the menu in the same way. It's great if you can buy two pieces of equipment in one when replacing an existing item."
Taylor has also been ordering a number of panini grills as of late as operators look for budget buys with less ventilation and overhead. Surprisingly, these little grills can perform many tasks in one very small footprint, he says. In addition to sandwiches, "you can cook eggs and potatoes by not putting the top down and using it as a grill. There are many creative things you can do."
Then there's using food processors as blenders and purchasing simple attachments to create meat grinders and juicers out of stand mixers. "People are getting very inventive," Taylor says.
Consider Energy Efficiency
Of course, nowadays when looking to replace equipment, energy- and water-saving capabilities are more important then ever before. Due to increasing utility, overhead and food costs, operators are looking to cut bills where they can. Again, just as when purchasing a new car, most of us would at least consider a hybrid or a model that uses less gas given the rising rates.
"As restaurant equipment gets older, it naturally begins to use up more energy trying to perform at the same level," according to Galvin.
The Department of Energy and many states across the country offer rebates as incentives to purchase Energy Star-rated and other energy-efficient equipment. While California led the efforts in that regard, Massachusetts, for example has stepped up these paybacks, according to Taylor. "I sold a convection oven that was Energy Star-rated to a customer recently, and he got $1,500 back as soon as he bought it," he says. And that was just up front; in just a year, the energy-efficient model was expected to net an additional $900 in energy-cost savings. In this case replacing the old convection oven with the new Energy Star-rated one made perfect sense.
It's also important to make sure that new energy-efficient equipment performs to the same level as the old, otherwise, major setbacks to production and performance could occur, Taylor says.
Consider Value over Price
Many operators shy away from upgrading equipment during a replacement sale. But now is the time to invest and avoid another breakdown or short lifespan, according to Zena Dater, sales rep for Oswalt Restaurant Supply in Oklahoma City, Okla., and FE&S magazine's 2008 DSR of the Year.
"People are looking at the value of a piece now when they shop for replacements," Dater notes. "They want to know how long it will last, and they're looking at the warranty program. I think people are starting to get money and loans again, and they're beginning to get that 'I get what I pay for' mentality. They're looking for quality rather than shopping cheap."
While Dater works with many chain restaurants that tend to be ready to spend more up front, even her mom-and-pop customers and the dealer's off-the-street customers are looking for quality and value over price. "The mom-and-pops now want to know what the chains are using. They figure the chains have already done the research and development on a product and it's a proven, quality piece."
Even with smallwares, Dater's customers are shopping for quality over price. "Our customers are a lot more educated now. In the past, where a customer paid a dollar for a two-piece ladle, they're now willing to spend $1.60 on one piece because it won't break as much. They're concerned about warranties, even with smallwares," she says. In short, durability and reliability sells more equipment these days.
Research New Technologies
Regardless of whether the operator ultimately decides to upgrade a piece of foodservice equipment, making a replacement purchase offers an opportunity to at least find out what new equipment has entered the market since the operator last examined a particular product category. And in many instances, that's where the consultant and dealer can be helpful.
"As a dealer, I use the opportunity of a replacement sale to educate, but I'm constantly part of the learning curve too," Taylor says.
Taylor and Galvin encourage researching the best options. "A lot of times people feel they need to go simple because of the workforce," Galvin says. "However, young people today can use computers so fluently and can handle the higher-tech equipment. Many operators, especially chains, won't invest in this type of equipment if they think their workforce can't jump in and use it."
Higher-tech equipment often comes with more built-in labor assistance; better controls mean the equipment is smarter and can produce consistently without as much staff oversight.
Still, the newest, coolest machine on the market isn't always for everyone. "One of my clients churns out Buffalo wings all day," says Toukatly. "They don't need the highest-tech fryer, they just need one that can run constantly all day and take a beating."
Many operators have noticeable highs and lows in cash flow, so they should act proactively during high periods rather than being forced to be reactive during low periods, which can hamper operations and sales that much more, Galvin says. The last thing any operator, and particularly a restaurant, wants is a major piece of equipment like an oven, range or refrigerator going down during their peak period.
Noncommercial institutions with capital budgets must be even more proactive — evaluating service records on a regular basis and planning well ahead for major equipment purchases, even one-by-one replacements, according to Cuyler. "Replacement sales for these operators don't happen overnight," he says. "If the capital lends itself, I encourage us to look closely at the options so the equipment doesn't keep needing service."
Hotels are no different. "Hotels are definitely watching their budgets even closer," Cuyler says. "They definitely want their kitchens running and limit exposure to added expense as much as possible. They want to spend the least amount of capital as possible."
But many noncommercial institutions, particularly hotels, have separate budgets for capital expenses and repairs. This is the perfect opportunity to balance a replacement sale onto the repair budget. "If something needs to be replaced because it broke down in the middle of the year, that can go on the repair budget," Cuyler says.
When buying new, just like using Consumer Reports for cars, it's important to do your homework, starting with service records of equipment, if available, or again, use the dealer or consultant.
"Don't take the word of the factory alone," Galvin says. "You have to investigate on your own."
Some dealers and manufactures will allow operators to test the equipment before buying, especially higher-end, high-priced equipment, says Dater, though it may not be an encouraged practice. That said, this is precisely where the dealer's relationships with the factory, rep and service agent become even more important.
Dealer-Service Agent Liaison
Dealers must do more than just stay on top of new equipment and technologies. "Customers are a lot more educated now," Dater says. They're able to do all the research they want online before seeing the dealer, she adds, so in that regard, dealers must step up their services to compete. That includes forging stronger relationships with service agents to fix parts when they break, and setting up solid preventative maintenance plans so new equipment will last longer.
It also means working with the factory if there is a problem after the buy. "If something turns out to be a lemon, we'll have the manufacturer's rep come out and take a look at it," Cuyler says. "If it's a repeating problem, though, we'll have a tech from the factory attempt the repairs, and if we have a piece that just can't be repaired, we'll press the manufacturer to take it back."
Dealers can also help buyers know if parts are going to be readily available for new replacement purchases. Dater will call her service agent colleagues to find out if they have parts available, how long they would take to order, and if they could even keep extra parts on hand should the equipment break down.
For Toukatly, the availability of OEM parts is key. "It's not hard to replace parts if you get OEM ones, but if not, you want to make sure the service agent is CFESA and factory trained so that they install it correctly. Troubleshooting requires much more training rather than just getting a part."
Fitting the Bill
Galvin says one of the biggest mistakes operators make is buying a replacement piece that doesn't fit with the same power requirements as the original piece of equipment.
At the chain level, with so many purchasing directors taking over equipment-specifying decisions, these seemingly minor — but actually major — misses can throw off an entire kitchen. Details about electrical, mechanical, ventilation and other needs must be researched up front.
Otherwise, Toukatly will need to come in. "I see the same mistake over and over," he says. "An operator will buy a new piece without ordering the right voltage. Sometimes they just see a plug in a wall. It's not that they're dumb; it's just not their field, so they make mistakes with things like that, particularly if there's no dealer or consultant involved and they're ordering everything online."
Preventative maintenance plans not only extend the longevity and performance of equipment, they can help detect problems before they occur. PM service records, in that sense, become excellent sources of documentation for planning replacement sales ahead of time, according to both Cuyler and Toukatly.
Good documentation and file keeping of service reports help you get a handle on how your kitchen is performing and where replacements or upgrades might need to happen, Cuyler says.
And certain pieces of equipment require more attention than others; particularly, anything that uses water, such as steamers, refrigeration units, icemakers and combi ovens, says Toukatly. "Gone are the days when you would wash equipment with a hose or spraying oven cleaner all over the oven. Operators need to follow the manufacturer recommendations. You need the proper cleaning techniques and chemicals."
When it comes down to the wire, it's simple enough to replace a part or a whole piece of equipment — on the surface at least. But the more back-end work is done ahead of time, as well as during and after those decisions, the less those replacements will be required. And with lower costs for service, returns and rebuys are sure to follow.