Understanding the Total Cost of Ownership of your Restaurant Equipment

Whether you’ve been a restaurant owner for years, or are just getting your business off the ground, your pizzeria needs a variety of specialized types of equipment to operate and succeed.

In a recent post on The Back Burner, Greg McGuire urges restaurant owners to change the way they look at their equipment. It doesn’t matter if you can get an ice bin, freezer, or oven for a fantastic deal, second-hand or otherwise. These initial prices often mean nothing. What is important is calculating the total cost of ownership for your equipment.

Greg highlights four factors that determine total cost, among them capacity and energy efficiency.



Be certain you understand the volume your equipment can handle. If you buy a pizza oven that can handle 20 pizzas at a time, but rarely bake more than five at once, you are wasting your oven’s potential. If you are only using 25% of your equipment’s max capacity, then 75% of its energy is being wasted, with you fronting the bill. Likewise, if you make a buying decision based on today’s volume, you may find yourself in need of another new oven far too soon—another cost that you may not have considered. It’s a balancing act: choosing equipment to handle growth without going overboard.


Energy Efficiency

Energy usage information is your friend! Don’t always look for the lowest priced piece of equipment, Greg notes:

“Often more efficient units have a higher initial price because more efficient components are usually also more expensive. However, paying 10% – 20% more for a unit that’s 30% more efficient means you’ll still be saving thousands of dollars over the entire lifespan of the unit.”

For more on the topic, check out Greg’s original post on total cost of ownership.


Technology and TCO

When you evaluate the cost of a new point of sale system, the same principles apply. Over the life of your POS system, you’ll incur extra costs that don’t appear as line items in the quote from your POS vendor.

To estimate the total cost of ownership of a POS system, you need to factor in the money, time, and resources involved in purchasing, installing, maintaining, and upgrading it over its life cycle. This means that a high end solution that is easy to deploy, effortless to upgrade, and flexible enough to grow with you may prove less costly over the long haul than a system with a lower initial price.

The costs associated with owning a POS system fall into three categories: rollout costs, life cycle costs, and growth costs.


Rollout Costs

These are the costs associated with rolling out the system in your restaurant (or across multiple locations). Do you need proprietary hardware or can you source your own hardware for the system? Is the software easy to use, or will you spend a lot of labor hours training your staff? Does the POS integrate with your existing above-store systems, or will you have to change them to fit the POS? The answers to these questions will help you understand the true cost of the system rollout. For more information on POS rollouts, read Rollout a New POS to Your Restaurant Chain.


Life Cycle Costs

These costs deal with your POS’s performance and productivity over an extended time. Essentially, how will your POS stand the test of time? When evaluating life cycle costs, find out whether your POS provider offers support options, software upgrades, and online training. What are the costs? What’s included? Look closely at the hardware provided: is it high quality, proven in a dusty restaurant environment? What are the terms of the warranties? And consider the track record of the POS vendor as well: how often do they release upgrades, and how quick are they to adapt to the changing needs of the restaurant industry?


Growth Costs

How scalable is the new POS? When you decide to open a new location, is it a simple matter to add a new POS system? What tools does the POS provide for managing multiple locations and menus? When you decide you want to start a loyalty program, or dive into online ordering, what options does your POS vendor give you for integrating with these types of services?

It’s human nature to search for the immediate deal. But ongoing costs for maintenance, training, and replacement parts—not to mention the potential costly toll of making the wrong choice—should play every bit as big a part in your decision as the quoted price.


New call-to-action


Posted on Tue, Aug 16, 2011 @ 09:08 AM.
Updated on April 20, 2021 @ 8:31 PM PST.

Tags: Restaurant Management, Point of Sale Hardware, Point of Sale Maintenance

New call-to-action