Is A Free On Loan Coffee Machine A Good Business Decision

Is a Free On Loan Coffee Machine a Good Business Decision

First of all running a cafe is challenging and highly competitive in the current business environment. Therefore  you need to have the best tools to achieve success. Also the Cafe industry is a tough. Furthermore an environment with great competition and  a cafe on every corner. So when choosing your coffee bean supplier and your coffee machine you must choose wisely. Hence it is absolutely crucial  you select the best partnership for your cafe.

Lets Discuss The Benefits and Disadvantages of Entering A Free On Loan Agreement with Your Coffee  Roaster

“Is a Free On Loan Coffee Machine a Good Business Decision”

There are a number of different rental packages available for coffee machines. First of all and most noteworthy is one of the oldest.  Also  probably the most popular which is a  rental structure known as a Free on Loan Coffee Machine. Due to its popularity. I will in this post discuss the good. In addition the not so good components of a free on loan package. Because you need to know. When you should and shouldn’t elect to go for such a package.

What Is A Free On Loan Coffee Machine Rental ?

“Is a Free On Loan Coffee Machine a Good Business Decision”  ” You will see, read and hear terms like everywhere like”

Is a Free On Loan Coffee Machine a Good Business Decision For your Cafe
Is a Free On Loan Coffee Machine a Good Business Decision For your Cafe
Is a Free On Loan Coffee Machine a Good Business Decision For your Cafe

A free on loan coffee machine rental is one in where profits from bean sales from your roaster. YOUR COFFEE BEAN PURCHASES are  used to offset any rental of the coffee machine. By the Same Token when renting a coffee machine there are two things that a customer pays for each month in a traditional rental.

1. The rental of the coffee machine.
2. The coffee and coffee related products for the machine (milk, sugar and hot chocolate) in the case of a vending machine.

Consequently in a free on loan package agreement. Coupled with Maintenance usually a customer must commit to a minimum  purchase volume of product ( Coffee Beans ) each month in order to obtain a zero rental package.

Here is a Comparison and a Good Example.

“Is a Free On Loan Coffee Machine a Good Business Decision”

Rental Plus Coffee Costs.

On a traditional coffee machine lease  agreement a customer would spend A$ 500.00 per month on the Lease of the coffee machine. Not to mention A$ 2 880.00 on coffee on a monthly basis. Therefore a Total of $ 3380.00 Total expenditure per month ( Coffee costs amortized at 30 Kg a week consumption at a cost of A$ 24.00 per Kg )

Free On Loan Agreement Same Coffee consumption.

Entering a  free on loan agreement for your coffee machine would mean. Together with a minimum contract time of generally 24-36 months.  And an increase in coffee price. Maybe $ 30.00 a Kg . As a result you you would commit to purchase A$ 3600.00 of  coffee Beans per month. Consequently for this commitment you would essentially be given a discount of A$ 500.00  to cover the Lease  charge. However you would be $ 2 640.00 worse of under this arrangement for this plan. To say nothing of the additional savings to you would enjoy once the Lease had ended. And off course you take ownership of your machine.

Coffee Volume and Purchases Determine the Quality Coffee Machine You Are Supplied

“Is a Free On Loan Coffee Machine a Good Business Decision”

From Left to Right.

A Black Eagle Coffee Machine – High Volume Purchases with a High Price for Coffee

A White Eagle Coffee Machine – Medium Volume Purchases With a High Price for Coffee

A Nuova Simonelli Appia ii – Low Volume Purchases With a High Price for Coffee

Is a Free On Loan Coffee Machine a Good Business Decision For your Cafe
Is a Free On Loan Coffee Machine a Good Business Decision For your Cafe
Is a Free On Loan Coffee Machine a Good Business Decision For your Cafe
When A Free Rental Option Is A Good Option.

“Is a Free On Loan Coffee Machine a Good Business Decision”

Free on loan options are good when.

  • Most of all only when you can consume the required amount of coffee on a monthly basis
  • Since you don’t want to get a “free coffee machine” then be paying for coffee that you can’t consume.
  • Ideally you should test out the volume of coffee you can comfortably sell on a monthly basis first
  • Especially relevant is you need to know if you can before committing to a free on loan package.
  • Not to mention you are confident you and your customers will like the coffee supplied on a monthly period
  • In the light of the fact Coffee is a lot about preference.
  • Almost certain you don’t want is to be forced to drink or sell a coffee brand that you don’t enjoy every day just to get a free rental.
  • Again you need to to test the coffee in depth before committing to a free rental coffee machine.
  • Likewise you must have the ability to change decisions easily if the situation arises that it is no longer working for you
  • Because over the years I’ve seen many companies unfortunately need to downsize.
  • Therefore you need the flexibility to make sure  you have the option to change your rental package at any time if your circumstances do change.
In Conclusion:

When the circumstances are right. A free on loan coffee machine can be the most cost effective and best way to rent a coffee machine. Please just take care of all and any potential “challenges” . Mentioned above before committing to a long term contract.

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