If you have a coffee shop or are looking to open one, then a commercial coffee machine is an asset that is very important to your business. This is the machine that is going to help you get your tills ringing and will be the heartbeat of your business.
Over the years, we have managed to help hundreds of customers to secure the correct machine for their business. We also help navigate our customers through the different ways to purchase. We find that we spend a lot of time explaining to customers the different options that are available, so we thought that we would put this blog together to help to explain each option available.
In a nutshell, there are three main ways to buy commercial coffee machines and in this guide, we're going to walk you through each option: purchase outright, lease to buy, and rental, helping you make an informed decision.
Purchase Outright
The timeless classic, and obviously the simplest way to buy a commercial coffee machine is to purchase it outright. If you have the budget, this is often the most cost-effective option in the long run.
How does it work practically?
- We quote you for a machine- You pay a deposit to secure the equipment
- We then arrange all the equipment to be delivered to you at the time we have agreed
While this is happening, we work with you on making sure that your site is ready. Basically, we will need to see the space where the machine is going and we can do this by just receiving photos of the area. We are looking to make sure that you have:
- Enough space for a start- The correct electrical supply (plug) to power your new machine
- Potable water and waste within 1 metre of where the machine is going
- Space for a water filter
Once the final payment is made, the machine is released and fitted by one of the manufacturer's engineers.
Training, of course, is done by our barista trainers, and we will carry on working with you to ensure that your commercial coffee machine is working as it should, and you are ready to go serve and supply great coffee.
Lease to Buy
This is where it gets a little bit more complicated - it's simple enough to understand, but there is a bit of paperwork to sort out and credit checks to do. But what is lease to buy and what are my coffee machine leasing options?
A lease is basically a contractual agreement between you as the user, and a leasing company who is the owner of the asset. The contract permits you to use this asset for an agreed amount of time which is typically 3, 4 or 5 years and spread the cost over that time.
The arrangements that we have helped our customers with is a fixed term lease to buy contract. What this means is that at the end of the term, there is an option to transfer the title of the asset to you and your business. This is normally a relatively low administration fee, but then the title (ownership) will legally be transferred to you and you can put it on your balance sheet. Happy days!
What are the benefits of leasing a commercial coffee machine?
In many instances, leasing is the right way to go, and there are tax advantages too that are worth mentioning.
Protect your cash flow:
If you lease, then you are protecting your cash flow. Think of this, instead of handing over a big wad of cash to pay for a machine you decide to instead keep that cash in the bank and then pay for the machine monthly. If you need working capital (cash in the bank), then this is a good idea.
Upgrade to a higher-spec coffee machine:
Leasing helps you to purchase a better-spec machine. If that top-spec machine is what you are after but you can't quite purchase now, then leasing is the best option for sure.
Tax advantages:
There are actually tax benefits of leasing a coffee machine and this is one of the main reasons that big and successful businesses tend to lease rather than purchase. Lease rental is 100% tax deductible. This allows you to write off all monthly payments against your company's tax bill. If your business is profitable and you manage a corporation tax bill each year, leasing becomes an option worth considering.
Lease vs Buy
Example: If you lease a machine for £7,500 + VAT on a 3-year agreement, your total tax relief can be significantly higher than if you purchased the machine outright. Here’s how:
| Year | Capital Allowance | Tax Relief | Year | Capital Allowance | Tax Relief |
| 1 | 18% of £7,500 = £1,350 | Less 19% = £256.50 | 1 | 12 rentals of £256.25 | Less 19% = £584.25 |
| 2 | 18% of £6,150 = £1,107 | Less 19% = £210.33 | 2 | 13 rentals of £256.25 | Less 19% = £584.25 |
| 3 | 18% of £5,403 = £907.74 | Less 19% = £172.47 | 3 | 14 rentals of £256.25 | Less 19% = £584.25 |
| Total Tax Relief = £639.30 | Total Tax Relief = £1,752.75 | ||||
In this example, leasing the coffee machine results in £1,113.45 more tax relief than purchasing outright.
We are not a leasing company so we do not offer leasing directly, however, we have relationships with a number of leasing companies that can offer you several leasing options. Ultimately, the agreement will be with you and a leasing company, we just join the dots.
Things to bear in mind:
- Coffee machine leasing is typically only available to UK-listed limited companies
- The value of any leasing arrangement needs to be over £1,000 + VAT
- Better rates are given to established businesses with over 3 years of trading history
- A personal guarantee may be required
- Paperwork must be completed, and the leasing company needs to be satisfied that your business can afford the payments before we are given instructions to install
- Leasing companies are like banks, nobody likes them, but they are quite useful
What to watch out for:
Ensure you sign up for a FIXED term lease with no rolling agreement after the term. If not, then your leasing company can in effect continue to charge for the asset until you terminate the agreement. For obvious reasons, we do not offer these arrangements!
Myths about leasing coffee machine leasing:
If you lease a commercial coffee machine, everything is included and there is nothing left to pay
- People are often under the impression that if they lease an asset, that all the servicing and maintenance is included in this. This is not often the case at all, generally, it is for the asset only. It still needs to be maintained and it is your responsibility to keep the machine in good working order.
You can change or upgrade your machine part way through the term
- Ok, so while this is possible, we are going to let you know why it shouldn't be considered. Leases are given by financial institutions that only care about getting paid. The only way that they get paid is if you complete the term. If you want to exit the term and upgrade your machine, then you have to pay your way out of the agreement, which is often the same price as just letting it run its course.
Coffee Machine Rental
Finally, if you’re looking for a more flexible option, renting a coffee machine directly from us might be the way to go. This is another way to secure the use of a coffee machine, but the main difference with this option is that the machine will never become your asset, it is simply on loan to you or your business.
Key benefits of renting:
- We'll take care of maintenance and servicing and make sure that you know how to use and look after it
- No large upfront costs - perfect for businesses that want to preserve cash flow
- Flexible rental terms which are suitable for short or long-term needs.
Because these arrangements are directly through us and with equipment that we have paid for in advance, we have to make sure that we are in a position to be able to help support you throughout this rental period.
Conditions of renting a machine from us:
A Rounton Coffee rental does mean there is an obligation to purchase our coffee. We think that this is a fair trade as any machine will cost us £££’s upfront, and we are effectively investing in your business and preserving your cash flow. Contracts are the devil, but we would have one set up to protect us both from all kinds of eventualities.
All of our customers are visited routinely, but if you have a rental, then we would need to visit and audit the machine, just to check on it and make sure it's in a great workable condition and being looked after.
We want to live quiet and peaceful lives, so we rent equipment that is reliable and is the right application for your business needs, whether that is an office or a garden centre, it's our job to look for the correct machine the first time around
How much is a coffee machine rental?
Coffee machine rental pricing is based on several factors:
- The value of the equipment being rented
- The duration of the rental period, i.e. weeks, months, or years
- Servicing costs, especially for bean-to-cup machines, which have more moving parts and tend to be more expensive to service.
Get in touch
Choosing the right coffee machine for your business is a big decision, but you don’t have to make it alone. Whether you’re ready to buy outright, lease, or rent, we’re here to help you every step of the way.
If you have managed to get to the end of this (well done) and still have questions, we are here to help you. It is easy to get in touch with us to have a conversation about your options and how best to finance your dream coffee shop.
If you are thinking of purchasing a coffee machine, please get in touch with us and we will be happy to give you honest advice.
- Call us directly on 01609 765034
- Or email us at info@rountoncoffee.co.uk