Restaurant Equipment Auctions: Everything You Need To Know
Maybe you’ve been eyeing a sweet Vulcan 10-burner online or have your heart set on a premium walk-in refrigerator. A restaurant kitchen stocked with the right equipment is the starting point for great cooking and happy customers. But opening a restaurant isn’t cheap. The median cost to open a restaurant is $450 per square foot, and depending on your space, it can range from $95,000 to over $2 million. That’s where restaurant equipment auctions come in. You can buy big-ticket items for a fraction of the price — and not a dollar more than you want to.
Restaurant equipment auctions are not dissimilar to bidding on pricey antiques at Sotheby’s or even items on eBay. The auctions occur either in person or online (sometimes both), and just like regular auctions, the highest bidder wins. The seller sets a minimum, and each subsequent bid is higher than the previous one until no other buyers offer more money. The competitive nature can get the adrenaline pumping, and there’s always the chance you’ll get swept up in a bidding war— yes, even when it comes to not-so-thrilling pots and pans. But ultimately, you have control over how much you want to pay.
That said, you still need to know what you’re getting into. If you win the bid, you are obligated (often legally bound) to buy the item and can be held liable if you back out. Like most things in life, the key to shopping at restaurant auctions is time, money, and strategy. Here, we provide all the details you’ll need to shop at a restaurant auction and win.
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The Benefits of Restaurant Equipment Auctions
Though it sounds counterintuitive, auctions can benefit both the buyer and the seller, but in different ways. Sellers often turn to auctions to liquidate all their restaurant and business assets when closing up shop, which offers several advantages. First, the seller controls the entire auction process, setting the minimum bids and fueling a competitive environment that often translates to more money for items than they’d usually get. Plus, restaurants can quickly dispense with a literal kitchenful of stuff and move on to their next venture or shopping spree.
Aside from liquidation, the other primary type of auction is consignment. A restaurant that is upgrading its kitchen or wants to offload some old equipment can easily consign certain pieces to auction, preventing equipment from ending up at the landfill while making money at the same time.
There are myriad advantages for the buyer, too. Buying used equipment instead of new can shave off tens of thousands in start-up costs and allow restauranteurs to access premium brands that would otherwise be out of reach. Beyond the standard-issue pots and pans, both types of auctions — liquidation and consignment — can also be chock full of treasures. Beautiful maple butcher blocks, vintage espresso machines, hefty cast iron cookware, and other coveted culinary gems often pop up at auctions.
Types of restaurant equipment auctions
Online auctions are prized by both buyers and sellers for their convenience and the sheer number of items that can be posted. Sellers enjoy the perks of having a seemingly limitless pool of potential bidders. Buyers can browse at their leisure and easily set search parameters to find just the thing they’re looking for. Online auctions can last for several days or even weeks, giving you plenty of time to agonize over that $1,200 pizza oven.
The downside for buyers is that online auctions typically aren’t “absolute” auctions. Say you bid $100 for ten Champagne buckets. The seller may want $300 and decide to nix the sale. Most live auctions, however, are absolute, meaning everything goes, even if you bid $10.
Live auctions usually occur at the restaurant, if it’s closing down, or at an auctioneer warehouse, where a lively auctioneer will use “the chant”— slang for the fast-paced rhythmic monotone auctioneers are famous for.
At live auctions, before the bidding begins, buyers are given a preview period to inspect the goods — and avoid getting saddled with a dud, a typical online shopping pitfall. You’ll have the opportunity to “kick the tires,” so to speak, and inspect the equipment up close. What’s more, live auctions are an underappreciated way to network with people in your industry: you may want to add all those sellers and auctioneers to your contact list for later.
This is the something-for-everyone option that combines the best of both worlds, with some shoppers present at the live auction and others bidding from work or on the go. To host a hybrid auction, you’ll need a dedicated event space (such as the restaurant or a warehouse), an online auction platform, and, in some cases, the ability to live stream.
How to Participate in a Restaurant Equipment Auction
Do your research and assess your needs
Both online and live auctions have risks, and sometimes, you may feel like you’re buying blind. First things first, it’s important to pinpoint reputable auction companies and platforms so you don’t get taken advantage of. To do this, check their reviews on social media sites like Facebook or Reddit, and don’t hesitate to reach out early to the auctioneer with questions. Legit auction house representatives will promptly reply with thorough answers. Auction sites should value privacy, have a secure payment platform, and offer dispute resolution if something goes awry.
Once you’ve whittled down your list of auction houses, the next step is to understand the rules of engagement: what kind of auction are they running (is it the standard “English” auction, a Dutch auction, or some other variation?). Find out what happens if you need to back out of a bid. Even though this is unlikely — and you’ve thoroughly assessed your equipment wish list and budget — you must be prepared for all scenarios.
Review the auction catalog and bidding process
Before diving into the restaurant equipment auction world, market value research is essential. In other words, do your homework. Most reputable auction houses will offer a detailed auction catalog with photos, which should be “required reading” long before you start bidding. For larger pieces such as freezers, ovens, refrigerators, and high-end specialty equipment, you’ll need to pour over equipment guides and check online marketplaces to fully understand the machinery you’re buying. It’s essential to get a sense of the fair market value of the inventory for sale.
Decide on your bidding strategies and tactics
Crafting a bidding strategy might be the trickiest part of the process. It’s not just understanding how auctions work — it’s recognizing your financial limitations (easier said than done). Setting a budget and sticking to it is crucial to coming out on top — whether you’re the winning bidder or not.
First up is the concept of incremental bidding. Each new bid must exceed the previous bid by a certain amount set by the auction house. Say the incremental bid is $1,000, but you mistakenly think it’s $100 — that’s a costly error.
Second, know your limit before you step one foot in the auction house. It’s hard not to swoon over the vintage Italian espresso machine, but don’t let emotions cloud your judgment.
Third, hang back a bit in the beginning. Early aggressive bidding tends to spark bidding wars, driving the price up. When the initial burst of bidding slows down, it’s a perfect time to throw your hat in the ring.
These days, online auctions are just as common as live events and require slightly different tactics. You may have heard of “proxy bidding”: bidders can set a maximum price they’d be willing to pay and let the computer bid for them until they hit their max. But if two people set high “maximums” on the same item, the price can skyrocket in seconds. In theory, you don’t need to watch proxy bids, but it’s a good idea to start low and keep adjusting.
Inspect the equipment
During on-site auctions, inspection days allow potential bidders to scrutinize the items for sale with a fine-tooth comb. There are a few ways to identify potential red flags. First, ask about the history of the equipment. That stand mixer may have been used daily for fifteen years or just a few times before the restaurant went belly up. The auctioneer may not have this info, but it doesn’t hurt to ask.
Also, ask if you can personally test out the equipment and inquire about any active warranties. The restaurant equipment may still have the original warranty, or the previous owner may have splurged for an extended warranty. Another detail to watch out for is the Energy Star logo, which means it meets the U.S. government’s criteria for energy efficiency and may save you money in the long term.
Chef Ryan Wagner, co-founder of Culinary Lab cooking school, puts extra value on flexible equipment, which may be in higher demand at an auction:
“Think machines that can slice and dice 50 times faster than a chef, a tilt skillet that can braise 100 pounds of meat at once, or an immersion blender that can puree 15 blender batches of salsa in one shot. In the food production business, time is money, and these types of equipment are real profit growers,” he says. Keep a lookout on preview day for these types of kitchen workhorses.
Winning an item and post-auction process
Auctions inspire a roller-coaster of emotions, but when you nab that coveting item with the winning bid, you can’t help but beam with pride (ok, maybe boast a little too). But this is just the first step. You need to finalize the sale and take possession of your “new” restaurant equipment. The auctioneer will provide payment timing (heads up: it’s typically immediately after the auction or within a few days). The payment may also include taxes. If you back out of the deal, you could face serious penalties – so make sure you’re sure before bidding.
As soon as you win the bid, put the wheels in motion to transport your equipment to your restaurant. Many auctioneers can recommend trusty freight partners, but having a backup is wise because you could incur storage fees if you wait too long. If a dispute arises for any reason — say you accidentally bought a lemon — the best tactic is to contact the auctioneer directly and explain your issue politely and professionally. Just in case, keep a record of your communications, whether by phone, email, or text messages. The next step will be using the seller's dispute resolution platform (which you researched initially) to mediate your issue.
Auction Tips and Tricks to Keep In Mind
Budget for additional costs
You’ve won the bid and paid the seller, but other costs are lurking in the background. A buyer’s premium is an additional charge on the winning bid that goes to the auction house as part of their fee. If you plan on financing your purchase, there will likely be interest and financing fees. And don’t forget to budget for unforeseen repairs or refurbishments to your equipment.
Conduct thorough research on equipment brands and models
Comprehensive research is the foundation of bidding success and begins before and during the auction process. Market value research, equipment catalogs, and hands-on testing are the keys to happy shopping.
Stay focused and disciplined during the bidding process
When a flurry of bids comes in, and everyone wants your item, it’s hard not to get swept up in the moment. However, being a boss at bidding means sticking to your budget and stepping aside when it doesn’t make financial sense.
Build relationships with auctioneers and industry professionals
Participating in a restaurant equipment auction requires close communication with the auction house. The more guidance they can provide, from pre-research to post-sale, the smoother your experience will be. This is a chance to build relationships that will be productive for years to come.
Buying restaurant equipment at auctions is a balancing act, not to mention an emotional roller-coaster. But its worth the effort for all those deals we’re confident you’re going to snag. With the proper research and approach to bidding, you can bring all the incredible and affordable equipment to your restaurant — where it belongs.
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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.