As business owners, we try to ensure that we utilize every piece of equipment, machinery, and tool till they can no longer be utilized. We will even repair older equipment well past its life expectancy in the effort to save a few dollars. However, the cost of repairing the same piece of equipment will add up. How do you know when it’s time to give up the repair crusade and simply upgrade and replace your equipment?
Cost of Repair
At Chill, our rule of thumb is simple: if the cost of the repair is 50% or greater of what the cost of a new machine would be, we tell people it’s in their best interest to buy a new one.
For example, a new 2-door reach-in unit costs $3,000, and if something happens to it and it’s a major repair, there’s $1,800 to replace the filter-drier, cap tube, and compressors. One more repair, like a leak in the evaporator, and suddenly the cost of repairs made to your old unit costs more than if you would have just bought a new one!
We do business for two major chains (one restaurant, one retail) in Sioux Falls that will go down to as much as 30% of replacement cost. If the unit is 10-years-old and the major repair cost is going to be 40% of a new unit, they won’t hesitate to buy new because it’s far more economical, comes with warranty, and the 10-year-old unit has served its purpose well and is well past its life expectancy.
Another point to be aware of is the likelihood of another breakdown with a repaired machine. If you spend $1,800 to repair a 10-year-old machine now, the chances are high you’re going to experience another major breakdown. Again, that’s where we caution people if they’re sure they want to invest $1,800 into an old machine, or spend $3,000 for a new machine and get the warranty on parts and labor. It’s a gamble, one that we don’t recommend the owners make because of the affect it’ll have on their business should their older machine go down for any length of time.
Ice machines are an important part of equipment for all restaurants. However, their life expectancy is approximately 7 years. But with regular maintenance, the machine can go far past that. We’ve seen machines that are 15 years old that look new because they’ve been well maintained. But if your machine isn’t well-maintained or it’s pushing a little bit past its life expectancy, consider upgrading and replacing your machine.
Life expectancy for reach-in refrigerator is 12-15 years depending on the usage. Those commercial reach-ins are not like household refrigerators that are opened infrequently. Commercial reach-ins get used a lot, day in and day out, in very hot conditions in a kitchen. They are put under a lot of stress, so if you get 10 years out of your reach-in, you’ve done very well. Again, we’ve seen some that are twice that age that have been well maintained because people have kept them clean, wiped them down, kept their food covered, etc., and they don’t look bad at all. Otherwise, 10 years and you should really be considering a new unit.
In the case of some older equipment, the refrigerants they require will no longer be available. This means future repairs will be very costly. In the past, when CFCs were phased out, we could buy R-12 for less than $1/pound. R-12 now, if you can find it, is over $25/pound. Current costs for refrigerants are at $10-15/pound and some of those refrigerants are going to be replaced with the changes coming.
Propane is becoming more and more popular, and it’s being used extensively in Europe but it hasn’t quite gained the acceptance in the US. Propane is less than $5/pound as opposed to current refrigerants are. Surprisingly enough, we have found some units out there with the old refrigerants that people are trying to keep running. It’s kind of like hanging onto stock you bought for $100 and now it’s worth a nickel, and you’re hanging onto it because you hope it’ll go back to $100.
Newer equipment, especially with walk-ins, are much more energy efficient as well. DOE efficiency standards are being raised, and even manufacturers of ice machines, which use a lot of water and electricity to begin with, have done their part to try and raise the efficiency on all the pieces of equipment.
While the idea of purchasing a large piece of equipment can feel like a shock to the system, in the end it may be the more cost-effective option. Not only do you get a new machine with a parts and labor warranty, you will also reap the benefits of a more advanced machine that is better for the environment and your business.
Our expert team at Chill is ready to help you determine whether it’s time to upgrade or replace your equipment. Give them a call today to schedule an appointment!