Food industry in for paradigm shift with leasing of professional kitchen equipments
"For the first time in the country, kitchen appliances are being offered on lease to commercial kitchens. Though a more acceptable trend in other parts of the world, this is a first of its kind in the Indian food service industry and the timing could not get better."
COVID-19 has changed the F&B industry in more ways than one. World over, restaurants and hotels are exploring multiple ways to woo customers back and making strategic changes in operation models to make business viable. However, it has been encouraging to see that the worst is paving the way towards new beginnings. While many leading luxury hotels have adapted to never thought before home delivery services for their popular restaurants, standalone restaurants are taking their kitchen to the open so that diners can see food being prepared in front of them. The key is to gain customer confidence. While many states in the country are opening their doors to tourists albeit with long lists of SOPs, the F&B industry too is waiting for business to start rolling all over again.
Leasing - the way forward
Just like the pandemic, these shifts too are unprecedented. The new kid on the block is leasing of commercial kitchen equipment. With the global food service equipment market size estimated at $31.64 billion in 2018 and expected to expand at a CAGR of 5.0% during 2019-2025, the trend of kitchen equipment leasing is taking baby steps in India. For the first time in the country, kitchen appliances are being offered on lease to commercial kitchens. Though a more acceptable trend in other parts of the world, this is a first of its kind in the Indian food service industry and the timing could not get better. This new facility empowers commercial kitchens to upgrade at nominal cost and also meet all the food safety guidelines at the same go. At times when making Capex is not a viable choice for most businesses, leasing facilities with convenient fixed monthly payment options is a wise alternative. While kitchens get the benefits of smart appliances they can also operate on a cost effective model as many of the modern appliances do not need much human intervention and can almost work on its own. The financial companies have made the offer more lucrative by making this facility almost interest free. At very low fixed monthly payments, one can lease super-efficient smart combi-steamers which are every chef’s dream. The combi-steamers are known for their high food safety standards and great cooking. Since maintenance and upkeep is taken care of by the leasing company, the lease model is a complete win-win for professional kitchens raring to adopt the new normal. The icing on the cake is that with these smart appliances HACCP data can be collected/stored and kitchens can now have documents to prove that food cooked in combi-steamers match up to the hygiene standard guidelines.
A new way of buying
The economic slowdown across the globe has left businesses with little capital to make upfront investments. At times such as this leasing can be considered the new way of buying. Consumers across the globe are realizing the benefits of leasing vis-a-vis making big capital investments. Companies do not want to block huge capital in buying expensive equipment or goods, and leasing allows them to start using and earning even without buying the equipment upfront. The cashflow coming from the equipment is used to service the rental of the equipment which makes for a sound business move. In stressed economic situations such as today's, leasing has found a new lease of life. Sectors, meanwhile have responded to leasing in varied ways at this time of pandemic induced slowdown. While office space leasing has nosedived, other sectors such as healthcare and automobile are showing encouraging signs. In healthcare, where cost of equipment makes a huge dent in the company's assets, customers have already made leasing a natural choice. It is noted that the healthcare leasing market is poised to grow by $17.14 bn during year 2020-24. Automobile bigwigs such as Volkswagen and Maruti are trying to woo the Indian buyer with easy leasing options and making headway too. These lease options come with lucrative buy back/retain and easy upgrade options which make the deal all the more attractive. With the hassle of maintenance mostly borne by the leasing company, the end customer is happy to pay a fixed monthly amount and avail the facility.
Though F&B and hospitality industry completely missed the summer rush this year with businesses recording negative earnings, the winter is poised to be better. It is sad but true that many popular outlets could not sail through these tough times but for those who have managed to stay afloat, openness to change and exploring newer and time-relevant options will go a long way. And with financial companies making leasing a win-win deal for both the lessor and lessee, things are sure to look up in the coming days.
About the author
The author is Managing Director of UNOX India Pvt Ltd.Visit the Author page >>
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