Buying and Installing Foodservice Equipment PDF

Buying and Installing Foodservice Equipment Carmen M. Pérez, DrPH, MHSN, RDN, LND Objectives Differentiate between buying and leasing new or used equipment. Choose the appropriate gas or electric equipment. Write equipment specifications to ensure you’ll get exactly what you want. Describe proper eq...

Buying and Installing Foodservice Equipment Carmen M. Pérez, DrPH, MHSN, RDN, LND Objectives Differentiate between buying and leasing new or used equipment. Choose the appropriate gas or electric equipment. Write equipment specifications to ensure you’ll get exactly what you want. Describe proper equipment maintenance. Equipment purchasing USA spend more than $7 billion/year Team approach: consultants, financial advisers, etc. üCosts of annual operation üCosts of regular maintenance üProjected costs over the expected life cycle Lease, Buy? New, Used? Is the equipment I need available locally? Do I need this piece of equipment now? Do I have enough space for it? How will I pay for it? Should I estimate future capacity? What capacity or size do I need? See pages 244-245 for other questions Rules for Improving Profitability Only have the equipment that you really need. Ensure you have the best equipment available. Ensure you have only as many as you need. Mark Godward, FES Magazine, December 2005 Used Equipment Find out exactly what the item cost brandnew, fully installed, and ready to use. e r a w e B r e Used Buy üpay no more than 50% of this brand-new price üget at least a 30-day warranty BUYING USED EQUIPMENT Used Equipment Restaurants USA, a publication of the National Restaurant Association, offers these additional guidelines for used-equipment purchase: Anything that needs repairs is a risk to the buyer. The availability of service for used merchandise is sporadic and should be determined first. Unlike new equipment that can be ordered to exact specifications, used pieces may not fit correctly into a kitchen. “One-stop shopping” to outfit an entire kitchen with used merchandise is almost impossible. In addition to its age, you have no idea how much it was used, how “hard” it worked. This can cause unforeseen problems. Service warranties, if any, are usually short: 30 to 90 days. Used equipment may be up for sale simply because it has been replaced by newer, more energy- and labor-saving models. Large equipment can be jarred, and possibly damaged, in moving. Does the sale price include professional delivery to your location? Equipment resellers may do nothing more than clean a used item before putting it up for sale; if they’ve already refurbished and serviced it, plan to pay more for it. Do business with a reputable dealer who will allow you to have the equipment inspected before the sale 283 For firsttimers in foodservice You end up paying more over the 3 – 5 years lease Support and service from the company Leasing Equipment Get financed 100% (bank lends 8590% for new equipment) Tax benefits Less expensive month to month than a bank loan Total Cost of Ownership Same as life-cycle costing Method for determining the true cost of an appliance by taking into account its: üPower and water use üDurability or expected useful life üEase of use and training üPotential repair and/or service costs NAFEM Life Cycle Tool Project Title Supplier Equipment Name Model Number 0 0 0 0 Annual Utility Cost Summary Other components of TCO in page 246 1A Electric Utility Costs Electricity Rate ($/kWh) Annual Electricity Consumption (kWh) Total Annual Electricity Cost 1B Gas Utility Costs Gas Rate ($/therm) Annual Gas Consumption (Btu) Total Annual Gas Cost 1C Water/Sewer Costs Water Rate ($/ccf) Sewer Rate ($/ccf) Annual Water Consumption (gal) Total Annual Water/Sewer Cost Utility Inflation Rate 1 Total Annual Utility Cost $ 0 - $ $ 0 - $ $ $ - $ 0 - $ 0% - Additional Annual Operating Costs 2 Consumables Cost Supplies Cost Supplies Inflation Rate 3 Labor (operating/cleaning) Hourly Labor Cost Total Labor Hours Labor Inflation Rate Total Annual Labor Cost 4 Other Costs $ 0% $ 0.00 0% - $ $ - Additional Comments: Note: Utility Cost Summary—Assumes utility expenses to operate the product during a fiscal year, including electric, gas, water and sewer connection costs. Operating Labor Cost—Labor costs includes annual labor to operate and clean the appliance on a daily basis (excluding preventative maintenance) and may include incremental gains due to reduced labor required for production. This is useful for comparing similar but different processes. Additional Operating Costs—Assumes miscellaneous operating expenses required for operation, including consumable supplies, e.g., air or water filters. ILLUSTRATION 9-1 One of the worksheets that is part of the “NAFEM Life Cycle Tool” for determining TCO. Source: Courtesy of North American Food Associaton of Food Equipment Manufacturers, Chicago, Illinois. Easy of use = labor savings Payment terms Warranties TCOless tangible factors Projected use Brand names Simply Payback Amount of time it takes for an appliance to pay for itself, not just its costs but also any savings you realize by using it. Simply Payback uDishwasher Vendor’s A $7,500.00 + life expectancy of 10 years + annual savings of $1,500.00 Vendor’s B $9,000.00 + life expectancy of 10 years + annual savings of $2,000.00 Simply Payback Vendor A: $7,500.00 / $1,500.00 = 5 years Vendor B: $9,000.00 / $2,000.00 = 4.5 years qTakes 6 months longer to recover the initial purchase price with Vendor A %) %) ations using the return on investment (ROI) method. To calculate ROI, subtract annual depreciation from annual savings and then Return of Investment divide that figure by the purchase price. The result is a percentage figure, your return on investment. The equation looks like this: (Annual Savings ! Annual Depreciation) Purchase Price " % (ROI) Using the same dishwasher quotes, let’s determine ROI for the A high ROI means the investment's Vendors A and Bgains (see Equation 2). to its cost. favorably the percentage of ROI, the better. Again, Vendor B offers the better buy. chine returns 2 percent more of the original cost throughout its usable life s machine. ROI Vendor A: ($1,500 – $750) / $7,500 = $750 / $7,500 = 0.10% ROI Depreciation: 10% of the purchase price Vendor B: ($2,000 - $900) / $9,000 = $1,100 / $9,000 = 0.12% ROI Vendor B offers the better buy All restaurant equipment is assigned a 7-year useful life = 1/7 over a 7-year time period IRS’s yearly publication #946 Commercial appliance’s useful life. Schedule by Internal Revenues Service (IRS) Depreciation Your accountant is the best source of advice. Department of the Treasury Internal Revenue Service Publication 946 Contents Future Developments....................... 2 What's New for 2022........................ 2 Cat. No. 13081F What’s New for 2023....................... 2 How To Depreciate Property Reminders............................... 2 Section 179 Deduction Special Depreciation Allowance MACRS Listed Property For use in preparing 2022 Returns Introduction.............................. 2 Chapter 1. Overview of Depreciation.... What Property Can Be Depreciated?.... What Property Cannot Be Depreciated?.. When Does Depreciation Begin and End? What Method Can You Use To Depreciate Your Property?.................. What Is the Basis of Your Depreciable Property?...................... How Do You Treat Repairs and Improvements?................. Do You Have To File Form 4562?...... How Do You Correct Depreciation Deductions?.................... Chapter 2. Electing the Section 179 Deduction................... What Property Qualifies?............. What Property Does Not Qualify?...... How Much Can You Deduct?.......... How Do You Elect the Deduction?...... When Must You Recapture the Deduction? Chapter 3. Claiming the Special Depreciation Allowance............ What Is Qualified Property?........... How Much Can You Deduct?.......... How Can You Elect Not To Claim an Allowance?.................... When Must You Recapture an Allowance?.... IRS.gov (English) IRS.gov/Korean IRS.gov/Spanish (Español) IRS.gov/Russian (Pусский) IRS.gov/Chinese IRS.gov/Vietnamese (Tiếng Việt) Feb 23, 2023................ 3 3 6 6...... 7..... 11..... 12..... 13..... 13............................. 14 15 17 17 21 22..... 22..... 23..... 25..... 25..... 26 Chapter 4. Figuring Depreciation Under MACRS.................... Which Depreciation System (GDS or ADS) Applies?....................... Which Property Class Applies Under GDS? What Is the Placed in Service Date?...... What Is the Basis for Depreciation?...... Which Recovery Period Applies?........ Which Convention Applies?............ Which Depreciation Method Applies?..... How Is the Depreciation Deduction Figured? How Do You Use General Asset Accounts? When Do You Recapture MACRS Depreciation?.................... Get forms and other information faster and easier at:........ 26................................... 27 27 30 30 31 32 33 34 45.... 50 Chapter 5. Additional Rules for Listed Property........................ 50 What Is Listed Property?.................. 51 Can Employees Claim a Deduction?......... 52 See Moodle Useful Life of Kitchen Equipment ANALYZING ILLUSTRATION EQUIPMENT Broilers Dish and Tray Dispensers Dishwashers Food Slicers Food Warmers Freezers Deep-Fat Fryers Ice-Marking Machines Milk Dispensers Ovens and Ranges Patty-Making Machines Pressure Cookers Range Hoods Scales Scraping and Prewash Machines Serving Carts Service Stands Sinks Steam-Jacketed Kettles Steam Tables Storage Refrigerators Vegetable Peelers Work Tables PROJECTED YEARS OF USE 9 9 10 9 10 9 10 7 8 10 10 12 15 9 9 9 12 14 13 12 10 9 13 equipment Source: Arthur Equipment, rev Press, 1991). Research Dealer’s showroom Food equipment exhibition üNAFEM – every other year üNRA – every year North American Association of Food Equipment Manufacturers ASORE PR Asociación de Restaurantes de Puerto Rico Gas Electric Natural gas is less expensive. Has an additional cost = demand factor. Does not make additional demands on kitchen ventilation systems. More fuel-efficient – more of the energy it uses goes directly into food. Technological improvements are more efficient. Fryers are more efficient – heating element is located directly in the frying oil. Bakery ovens produce moister products with longer shelf lives. Ovens are better insulated & has more uniform internal temperatures. Induction range-tops contribute to much cooler environment. Gas or Electric More energy efficient – actual power use is only a portion of its nameplate rating. Electric utility providers often offer a lower cost per kilowatt-hour as consumption increases. Costliest, most commonly used 18/8 most corrosion resistant = 18% chromium + 8% nickel n o i t c u r t s Stainless n Co s l i ta e D Cleaned correctly Steel Not impart flavors or odors to foods Most resistant to corrosion, pitting, discoloration Austenitic Steel Nonmagnetic steel ü16-26% chromium ü 6-22% nickel 18/8 stainless steel is a type of austenitic steel Other Substances Galvanized Steel Aluminum Iron or steel is coated with zinc Coated eventually chips and cracks Not recommended for areas damp or wet Emits toxic fumes in the case of fire Never recommended for exhaust hoods Tempered or alloyed aluminum can be almost as strong as stainless steel but not nearly as heavy It can be sanitized Is rust-resistant Reflects heat and light Does not ignite or burn Can be polished Doesn’t get brittle under cold conditions Thermal conductivity Fully recyclable Other Substances Wood Never be used around wait-stations, coffee makers, or anywhere that receives a lot of traffic or moisture Loses its shape & consistency when it gets wet Plywood acceptable for countertops, covered with plastic laminate or wood-look veneer Solid Granite Surface Marble Concrete Man-made materials: Corian® & Formica Gauge Thickness Lower number = more thicker üPots and pans 18-20 gauge steel üWorktables & counters 14 gauge üServing areas 16 gauge Equipment Specifications Concise statements about a piece of equipment, written to explain exactly what is needed so potential sellers can supply exactly what you want. Specifications’ Standards 1. The common, easily recognized name Reach-in refrigerator, one-door 2. A general statement of what the buyer wants A one-door reach-in refrigerator to be used by the hot-line cooks to store products prior to cooking Specifications’ Standards 3. Specific classification information Type, size, style, model, grade*, type of mounting required, etc. Drawings or diagrams will be helpful 4. Proof of quality assurance Inspection reports or results of performance tests on the equipment *Refurbished R, A, B, C, D Grades & Grade New Refurbished Reacondicionado Are graded depending on how many cosmetic imperfections they have. üScratches üScuffs üOther marks üHow much the product has been used by its previous owner üWhat packaging it comes in Specifications’ Standards 5. Delivery installation Who will do it, and when How much you are willing to pay for it Specifications’ Standards 6. Any specific requirements about construction Materials used to construct it Utility details or qualifications Performance parameters (what the buyer wants) Certification by an agency Warranty and/or maintenance requirements Instructional materials about installation, use, or maintenance (including the language) Utility Details or Qualification Process of proving with a high level of confidence that a device is able to operate consistently within the limits and tolerances which will be required during the production process. for it? Put your request in writing here. Any specific requirements about construction. This might include materials used to construct the equipment; utility details; performance parameters; certification by an agency, such as Underwriters’ Laboratories or the American Gas Association; warranty and/or maintenance requirements; and the need to be supplied with instructional materials about installation, use, or maintenance. (You’ll learn more about certification agencies later in this section.) Practical Specifications Another suggested list of very practical specifications comes from the Foodservice Information Library’s SPEC-RITE for Kitchen Equipment. It includes 20 specific points to consider: 1. 2. 3. 4. JWBK204_Ch09_p270-305.qxd Who is the purchaser? (Who’s paying the bill?) Where should the equipment be shipped? How is the equipment to be shipped, and who pays the freight costs? What specific services are included in delivery: unloading, uncrating, setting in position, leveling, mechanical connections, start-up, use demonstrations? 5. If permits are required, who will secure them? If inspection is needed, who does 7/17/08it, 4:51 AM pays Page for 291 it? and who 6. List any appropriate standards of national agencies (electrical, mechanical) for this type of equipment. 7. Provide mechanical details, such as types of utility hookups, dimensions, etc. 8. List the interior and exterior colors and finishes you want the piece of equipment to have. 9. Include any other options you would like. WRITINGstates EQUIPMENT 10. Decide to include (or exclude) the “or equal” clause, which thatSPECIFICATIONS you will accept something of equal value if your exact needs cannot be met. 291 11. Require in writing that all custom-fabricated equipment be of uniform design and finish. 12. Provide a deadline for delivery, which includes adequate time for production and shipping. 13. Outline warranty needs, including who will service the warranty, how long it will be, and what it should cover. 14. List installation responsibilities. Who pays for it? Is the cost included in delivery? 15. 16. 17. 18. 19. 20. Should installers be union or nonunion; at what rate of pay? Are there specific times of day the installation can (or cannot) be performed? If equipment arrives early, before a new facility is completed, where will it be stored, and who pays for storage costs? Taxes: What are they, and who pays them? When and how will the equipment be paid for? If changes are required, who pays for them, and how much? If there are delays, who is responsible for any additional costs (rush delivery, etc.) that may be incurred? If the order is cancelled, what would be an acceptable reason? Will there be cancellation penalties; how much? Who pays? If you will be doing a lot of spec writing, we recommend the SPEC-RITE publication. It’s a workbook to help equipment purchasers buy and sell intelligently. The book first guides the prospective buyer through a series of questions, offers some generic guidelines for each equipment category, and then generates a specification template. The activity is structured to improve communications between the operator and the dealer or consultant. As you can tell, this is much more complicated than a department store purchase. A few Pages 263-264 7 Deadly Sins of Equipment Maintenance Failing to keep condensers coils clean on refrigerator equipment. Neglecting cooling fans: ovens, steamers, etc. Not treating water or not cleaning scale buildup: steamers, dishwashers, ice makers, etc. Failure to clean exhaust fan filters or have ducts inspected and cleaned regularly. Failure to check dishwasher temperatures and pressure requirements, and make a daily check to ensure that flatware isn’t lodged in the wash pump motor. Food mixer abuse. Usually is a result of overloading or using the incorrect blade. Failure to maintain rotisseries. The drive system must be able to move freely or it will freeze. headquarters spot-checks units around the nation to ensure compliance with its maintenance policies. Maintenance is being treated as more than an afterthought in today’s restaurants, especially the big chains, and that’s a good thing. It impacts a variety of other functions: accounting (through TCO calculations); store operations (through training programs and scheduling of service); and capital spending. Maintenance also has a unique marketing function: The well-maintained restaurant is seen by all as a cleaner, safer place to eat and work. FOODSERVICE EQUIPMENT Maintenance “Top 10” List 1. Read the warranty information supplied with each piece of new equipment to learn what the manufacturer recommends. 2. Put all literature supplied in a three-ring binder. 3. Assign the binder to managers and require new managers to review it. 4. Prepare a one-page maintenance sheet and post it where it will be seen. 5. List appropriate clean dates and a box to initial and date when cleaning is completed. 6. Insist that managers pay attention to maintenance schedules. 7. Post a list of local service agencies, their phone numbers, and which brands they cover. 8. Upon start-up of a new facility, place a list in the front of the binder containing make, model, serial number and date, along with the service and warranty period for each piece of equipment. 9. Set up service, cleaning, and inspection programs for all operational equipment with servicing agents. 10. Set up a regular exhaust hood and duct cleaning program to prevent fires. Source: George Zawacki, senior associate, Cini-Little International, Inc. First appeared in Equipment Solutions, a publication of Talcott Communications Corp., Chicago, Illinois (March 2004). Operating Instructions Operating Instructions Cleaning Instructions JWBK204_Ch09_p270-305.qxd 7/17/08 4:51 AM Page 303 START-UP, SERVICE, AND SAFETY IN THE KITCHEN Safety Rules for Electricity 1. When you’ve turned off a circuit breaker to work on a piece of equipment, always put a piece of tape across it so someone else doesn’t accidentally turn it on. 2. After the circuit breaker is turned off, always test the equipment with a voltmeter to make sure you turned off the correct breaker and there aren’t other circuit breakers that need to be turned off. 3. Always check the voltmeter to make sure it works by testing it in a live outlet that you know works. 4. When doing a “jump” test: Turn off the power, place the jumpers across the switch to be jumped, turn the power back on to observe the results, turn the power off, and remove the jumper. 5. Never leave a switch jumped longer than the few seconds it takes to see the results of the test. 6. Never work on electrical equipment if the floor is wet. 7. If you must leave a piece of malfunctioning equipment, take precautions to ensure no one else will try to use it. Leave a big note taped to the front explaining the situation (e.g., “Out of Order, Will be back with parts this afternoon”). 8. When a piece of equipment is “temporarily” fixed, never let anyone use it until you are certain it is safe. 9. Never call a job “done” until you have thoroughly tested it and are 100 percent sure it is safe and fully operational. 10. Always know where you can turn off the power quickly in case of a problem, whether it’s at the plug or circuit breaker. Source: Don Walker, Manual of Gas/Electric Equipment (Walker Publications). Once they arrive, how long does it take them to diagnose the problem? If it takes more than two trips for one piece of equipment, that’s too long. Are you charged for more than one trip, even though it’s their fault that they can’t figure out what’s wrong? A bad sign. After a visit, does the equipment work fine...for a day or two? This indicates they’ve fixed the symptom but not the overall problem. 303 more than two trips for one piece of equipment, that’s too long. Are you charged for more than one trip, even though it’s their fault that they can’t figure out what’s wrong? A bad sign. After a visit, does the equipment work fine...for a day or two? This indicates they’ve fixed the symptom but not the overall problem. IN THE KITCHEN Safety Rules for Gas 1. Know the location of the gas shutoff valve on the piece of equipment you’re working on. Gas valves can jam easily, so turn it off before starting repairs. 2. Always know where the emergency gas shutoff is to the entire kitchen, and how to turn it off and on. 3. If you smell gas, turn the equipment off, wait for the gas to dissipate, then look and listen for the site of the leak. 4. If you opened up a gas line in any way, always check for leaks. 5. Use a soap solution to check for leaks, never a flame. 6. Fix all gas leaks promptly, however small. 7. Always cap unused gas lines. Don’t just turn them off. 8. When changing gas controls, always check to make sure the control is for the type of gas that you are using (natural or LP). Some controls are interchangeable, but others are specific to one type. 9. Light pilots with a tightly rolled piece of paper at least 12 inches long. This gives you some protection if the gas pops. 10. If the pilot light blows out, wait four to five minutes for any gas to dissipate before you try to light the pilot again. Source: Don Walker, Manual of Gas/Electric Equipment (Walker Publications).