Canadian restaurant operators have rarely faced a more difficult operating environment.
Margins were already thin, but rising produce, rent, electricity, tariff, and equipment costs are putting even more pressure on independent restaurants and small operators. More than 71% of operators are experiencing declining profits, while 36% are operating at a loss or merely breaking even.
At the same time, many restaurants continue to delay systems and equipment upgrades—decisions that can preserve cash in the short term but create larger problems when essential tools fail. When a commercial oven breaks down, a refrigerator stops working, or a POS system becomes obsolete, operators often have little choice but to act quickly.
Equipment replacements cannot always be avoided. But for restaurants already managing reduced profits and unpredictable costs, the bigger question is whether it makes sense to burn capital all at once.
That is where Tyrone Ho, President of Econolease, believes flexible financing can play a larger role. Econolease works with restaurant operators to help turn major capital purchases, including kitchen equipment and POS systems, into more manageable operating costs through financing models such as Rent-Try-Buy.
In an interview with Fintech.ca, Ho discussed the cost pressures reshaping Canada’s restaurant sector, why delaying equipment upgrades can backfire, and how flexible financing can help operators preserve cash while continuing to invest in the tools they need to survive and compete.
What costs are impacting restaurant operators most?
TH: Restaurant operators are no strangers to tight margins, but rising produce, rent, and electricity costs occurring simultaneously and unpredictably are throwing a wrench into how they plan, make a profit, and ultimately invest in larger-ticket upgrades like equipment and POS systems.
Whether a restaurant is replacing on-site appliances or the entire kitchen, upfront equipment costs can put a real dent in their budget, ranging from $15,000 to $300,000.
With ongoing trade tensions with the U.S., tariffs, and uncertainty surrounding the CUSMA negotiations this June, operators’ budgets are being tested, leaving little to no room for failure. An oven or refrigerator breaking down can cost more than a few months of profit and it can impact the restaurant’s survival.
How are rising costs reshaping the way restaurant operators think about equipment spending?
TH: Operators are delaying equipment replacements and upgrades altogether, leading to larger investments and spending when current equipment fails and impacts restaurant performance. If a refrigerator stops working, it needs to be replaced quickly to resume operations and keep produce fresh. Ranges with uneven heating and cooling spots lead to inconsistent food for diners, risking revenue and customer loyalty. It costs operators to delay equipment and system investments, which end up costing them thousands of dollars when equipment fails.
For many small restaurants and independent operators, making upfront investments limits operators’ ability to pivot in other strategic ways to keep customers coming in the doors, from menu shifts to marketing with influencers or local publications; all of these activities are halted when cash is spent all at once on equipment. TAll of this is on top of the emergency funds operators need to continue weathering tariff costs, limiting how they can reach customers at this pivotal moment.
How does financing turn a major capital expense into a manageable operating cost?
TH: When operators focus on financing structures that fit the restaurant model, such as Rent-Try-Buy, they break down larger investments in equipment and POS systems into smaller, manageable payments.
With the current decline in dining out as operators head into the summer, their busiest season, they need to launch new menu items and market themselves to consumers to effectively capitalize on the opportunity. Through Rent-Try-Buy, increased flexibility in equipment takes some of the day-to-day pressure off operators, allowing them to get or upgrade the equipment they need for the summer and throughout the year, without the upfront investment.
How does Rent-Try-Buy give smaller operators greater financial flexibility?
TH: With smaller monthly payments, Rent-Try-Buy makes it easier to manage the investment in high-quality, efficient equipment alongside other business costs.
The biggest constraint for smaller restaurant operators is cash flow, and as a result, they buy cheaper equipment with a shorter operating life. With financing, smaller operators can avoid equipment that may fail sooner, the costs of maintenance, and replacements, and go for higher-quality refrigerators, ranges, and other kitchen staples that will last.
As operators scale, access to equipment upgrades is a competitive advantage, enabling swift upgrades to accommodate larger menus, more customers, and compete with bigger, established restaurants.
What should operators know about choosing the right financing plan for their restaurant?
TH: Not all financing plans are built the same, but many restaurant operators need a payment structure and rate that aligns with their available cash. To determine available cash flow, operators need to consider the seasonality of Canada’s hospitality sector and account for slower revenue months. The payments won’t stop to account for slow business, so the payment size needs to account for low months.
Beyond the payments themselves, operators should consider financing providers and plans that go beyond the initial equipment and offer flexibility to upgrade or add equipment down the road. With models like Rent-Try-Buy, operators aren’t locked into just the equipment they selected at first. If they need an upgrade or want to switch to another option, they can switch out equipment in real time.
Restaurant operators will continue to face cost challenges in the coming year, and the key to survival is not to avoid spending altogether, but to deploy capital strategically using flexible financing structures to keep cash available.
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