Unlock the Secrets to Restaurant Fitout Finance

A restaurant fitout can cost anywhere from $100,000 to well over $500,000 depending on the size and complexity of your venue, and most operators don't have that kind of cash sitting idle.

Whether you're launching a new venue, renovating an existing space, or upgrading tired equipment, asset finance lets you spread the cost over time while preserving the capital you need to cover stock, wages, and the inevitable surprises that come with running a hospitality business. The right structure also delivers tax benefits that reduce the real cost of the fitout, and gives you flexibility to upgrade equipment as your business evolves.

What Counts as a Restaurant Fitout for Finance Purposes

A restaurant fitout includes any equipment or fixtures that are essential to operating the venue but not permanently fixed to the building.

That typically covers commercial kitchen equipment like ovens, grills, fryers, refrigeration, and dishwashers, as well as front-of-house items like tables, chairs, point-of-sale systems, and bar equipment. If it can be removed without damaging the structure, it's generally financeable. Items like flooring, tiling, plumbing, and electrical work are considered leasehold improvements and usually need a different kind of funding, such as a business loan or line of credit.

The distinction matters because equipment finance is secured against the items you're purchasing, which means lenders are often more willing to approve it and the rates can be lower than unsecured borrowing. If your fitout includes both equipment and structural work, you might split the funding between an asset finance agreement for the gear and a separate facility for the building work.

How Asset Finance Works for a Hospitality Fitout

You select the equipment you need, get quotes from suppliers, and then apply for finance based on the total cost.

Once approved, the lender pays the supplier directly and you repay the amount over an agreed term, usually between two and seven years depending on the life of the equipment. Most arrangements are structured as a chattel mortgage, which means you own the equipment from day one but the lender holds a security interest until the loan is repaid. You make fixed monthly repayments that include principal and interest, and at the end of the term the equipment is yours outright.

Alternatively, you can structure it as a finance lease or operating lease, where you don't own the equipment until the end of the term or you return it and upgrade. The structure you choose affects your tax position, balance sheet treatment, and flexibility, so it's worth talking through your options before you commit.

Tax Benefits and Depreciation on Hospitality Equipment

One of the biggest advantages of financing a fitout is the tax treatment.

Under a chattel mortgage, you can claim the GST upfront if you're registered, which immediately reduces the effective cost of the equipment by ten percent. You can also claim depreciation on the equipment each year, which lowers your taxable income, and the interest portion of your repayments is tax deductible. Depending on your structure and the value of the equipment, you may also be able to access instant asset write-off provisions that let you deduct the full cost in the year of purchase, though thresholds and eligibility change regularly so you'll want to check with your accountant.

Consider a café operator fitting out a 60-seat venue with $150,000 worth of kitchen and front-of-house equipment. If they claim the GST upfront, that's $13,636 back in the first BAS. If they depreciate the equipment over five years and their marginal tax rate is 25%, they're saving around $7,500 a year in tax. The interest deductions add another few thousand dollars over the life of the loan. Those savings can make a real difference in the first year when cash is tight and you're still building momentum.

Structuring Repayments Around Your Trading Cycle

Restaurants and cafés have uneven cashflow, and lenders who understand hospitality know that.

Some lenders will structure repayments with a seasonal variation, so you pay less during quieter months and more during peak periods. Others will offer a balloon payment at the end of the term, which reduces your monthly commitment but means you need to refinance or pay out the balloon when it's due. A balloon can work well if you're confident the business will grow and you'll have the cashflow or equity to handle it, but it's a risk if things don't go to plan.

Another option is to align the loan term with the expected life of the equipment. Commercial kitchen gear typically lasts five to seven years with heavy use, so financing it over that period means you're not still paying for equipment that's already been replaced. Shorter terms mean higher repayments but less interest paid overall, and you own the equipment sooner. Longer terms reduce the monthly cost but increase the total interest, and you might find yourself financing equipment that's already outdated.

Vendor Finance and Supplier Arrangements

Some equipment suppliers offer their own finance arrangements, either directly or through a partner lender.

Vendor finance can be convenient because it's packaged with the purchase and the approval process is often faster, but the rates are sometimes higher than what you'd get through an independent broker with access to multiple lenders. It's worth comparing the vendor's offer against what else is available before you sign. In our experience, operators who go straight to the supplier without checking other options often pay an extra one or two percent on the interest rate, which adds up over a five-year term.

If you're buying from a major supplier like Moffat, Comcater, or Stoddart, they'll usually have finance options available at the point of sale. Just make sure you're clear on the rate, fees, and whether there's a balloon payment or residual at the end. Some vendor deals look appealing because the monthly repayment is low, but that's because there's a 20% balloon that you'll need to deal with later.

Upgrading Equipment as Your Business Grows

One of the benefits of structuring your fitout finance properly is that it gives you room to upgrade without starting from scratch.

If you take out a lease with a regular upgrade cycle, you can refresh your equipment every few years without a large upfront cost. That's particularly useful for technology like point-of-sale systems, which can become outdated quickly, or for equipment that gets heavy use like coffee machines and ovens. If you've structured it as a chattel mortgage and own the equipment, you can trade it in or sell it and use the proceeds to fund part of the next purchase.

Some operators set up a rolling facility where they finance new equipment as they need it, rather than doing one large fitout and then struggling to fund replacements later. That approach works well if you're expanding gradually or if you're replacing equipment as it reaches the end of its useful life. It also means you're not stuck with outdated gear because you couldn't afford to replace it.

What Lenders Look for When Approving a Fitout

Lenders want to see that you've got a clear plan, relevant experience, and enough capital to cover the things finance won't.

That usually means demonstrating that you've budgeted for stock, wages, rent, and marketing on top of the fitout itself, and that you've got a realistic view of how long it will take to reach breakeven. If you're an experienced operator with a track record, that counts for a lot. If it's your first venue, lenders will want to see a detailed business plan, proof of funds for working capital, and often a personal guarantee.

The stronger your financials and the more established your business, the more flexibility you'll have on structure and the lower the rate you'll pay. If you're early stage or don't have a long trading history, expect to put down a larger deposit or accept a higher rate until you've built some equity in the business.

Call one of our team or book an appointment at a time that works for you. We'll walk through your fitout plans, compare finance options from lenders who understand hospitality, and structure something that fits your cashflow and tax position.

Frequently Asked Questions