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How to Evaluate Total Cost of Ownership for School Foodservice Equipment

April 11, 2019
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As the end of the school year draws near, you may be starting to evaluate your foodservice equipment needs for the upcoming year. New equipment is a significant investment, and many factors affect the cost. Purchasing decisions often come down to the price, but if you’re not also factoring in the total cost of ownership (TCO), you’re not getting the full picture. By making decisions without understanding the TCO, you could be costing your business money and missing out on long-term savings.

Before you purchase new foodservice equipment, here’s a quick checklist of costs to run through before making your decision:

Retail price and installation
Since the retail price of equipment represents your upfront investment, you’ll need to determine how it fits into your budget. As you’re comparing sticker prices, make sure not to overlook installation costs, as that’s the other part of your initial investment. Check into associated installation fees to make sure you’re clear on the actual upfront cost.

Utilities
Beyond the price tag, you need to evaluate ongoing operational costs, including utilities such as energy and water. Over the years, those costs have been increasing, so from a budgeting perspective, it’s safest to assume they’ll continue to climb. You might be surprised at how much utilities add up over time, so make sure you’re taking them into account when you’re calculating costs. As you weigh your options, do the math and forecast how much energy-efficient equipment might save you in the long run.

Labor
When calculating labor costs, history can give you some indication of what you’ll need in terms of staffing. However, cutting edge technology and state-of-the-art equipment might make it possible to streamline your labor costs. For example, newer commercial ovens may accommodate a higher volume of food and automate parts of the cooking process, which can improve efficiency and reduce headcount needs. When you’re calculating the TCO, don’t make the mistake of overlooking equipment impacts on labor because not all equipment is created equal, and savings vary between equipment types.

Maintenance and supplies
While maintenance is one of the less predictable costs, if you do your homework by looking into reviews and asking industry colleagues, you can get a sense of how reliable equipment is. Make sure to check whether suppliers have warranty policies or maintenance plans available, as those can also impact service costs. As for supply costs, check with a service partner to see if they can provide insight on what you’ll need to budget for equipment supplies each month.

Food waste
Last but not least, don’t underestimate the cost of food waste. A whopping 63 million tons of food are wasted in the U.S. each year, so it’s critical to consider how your equipment can reduce food waste costs. Thanks to modern technology, precision cooking is now possible with some foodservice equipment, which means less food waste. Features such as auto-load and unload ovens, and programmable recipe settings ensure food is cooked properly, so you save on overall food costs.

Don’t underestimate long-term value
While calculating the TCO can feel like a lot of work, it gives you a more accurate idea of equipment value so you can make an informed decision when purchasing. And if you’re preparing to invest in foodservice equipment for the new school year, it’s important to remember there is more to cost than what meets the eye. If you’re in the market for a commercial oven, make sure to evaluate the TCO and select a vendor dedicated to delivering long-term value at a reasonable price. Find out more about the Ovention difference!