OPERATIONS: Half-baked truths about refurbished ovens

 
Feb. 15, 2006

Marcus Bramhall earns a good living as the owner of the world's largest pizza equipment remanufacturing company, but he has little praise for the industry in which he thrives.

"The equipment business is a very bad business; it's a whore-ish business," said Bramhall, whose company, Pizza Equipment Supplies Inc., is in Cherryville, N.C. "There are a handful of really good companies in this business, and most of the rest aren't very good or they're run by thieves. I've seen more people ripped off in this industry than I can remember."

And yet pizza operators continue to buy tons of used equipment. Bramhall estimates that about $178 million is spent annually on pizzeria equipment, and half that amount goes to the used market. Much of it is refurbished to like-new condition, while a lot of it is sold in terrible disrepair. The result is inexperienced buyers hoping to save money often lose thousands purchasing machines that don't work.

"We've got

What's Important

Buying a used oven can be risky if an operator is inexperienced with such a transaction. Even equipment refurbishers say their industry is full of charlatans eager to rob unsuspecting buyers.

Refurbishers recommend operators first find reputable firms that will provide customer references. Call several sources to ensure they'll deal fairly with you.

Also look for ovens that are completely new inside and use the best replacement parts available.

people telling us on a daily basis they bought an oven off company ABC, it showed up, it didn't work and it's missing pieces," said Mike French, treasurer of MF&B Restaurant Systems Inc., an equipment refurbishment firm in Connellsville, Pa. "There are very bad business practices out there, so if you're going to buy used, know what you're getting and who you're buying from."

The cost of used equipment compared to new is the main reason operators take the risk on used. A completely refurbished pizza oven costs 30 percent to 50 percent less than a comparable new oven. And when a new top-of-the-line conveyor oven sells for $20,000, it's not hard to be attracted to a $10,000 to $14,000 price tag, especially when an operator is just getting started.

Jeff Akers, director of purchasing for Buck's Pizza in Dubois, Iowa, said the chain's operators have bought new, well-refurbished and not-so-well refurbished ovens in the past, and that they've learned this one lesson: well-refurbished is the way to go. Brand-new pieces typically operate trouble-free for many years, and they come with year-long warranties on parts and service. But Akers said a reputable remanufacturer's warranty is usually quite good, and their ovens usually last 10 to 15 years, about the same as new.

"A remanufactured oven rarely goes down in the first year anyhow, so it's not as though the warranty is that important," Akers said. "But the savings, which is typically a third of the cost, you can't beat that."

Les Nowosad, director of key accounts for Elgin, Ill.-based Middleby Marshall, which manufactures new ovens and refurbishes its older models, agreed that a properly reconditioned oven is a good investment for some operators. One done properly "is remanufactured not only to the same standard as the original, but actually to today's current standards with the latest and best parts. ... But the majority of Middleby's customers are major chains that want the latest ovens out there. They're able to make that kind of investment."

Where used equipment purchasers get in trouble, he said, is when they don't research the remanufacturer's reputation.

"There are many people who say they're a remanufacturer, but they do no more than blow the pepperoni out of the bottom of the oven and send it out hoping it lasts more than 90 days," said Nowosad, formerly Middleby's manager of remanufactured ovens. "Some don't rebuild to what I would consider a minimum standard. They'll do things like use mismatched motors or put in motors that run in the wrong direction. You name it, I've seen it."

What's truly refurbished?

Both French and Bramhall say a pizza oven isn't truly reconditioned unless every working component, including wiring and electronics, are replaced.

"That means the only thing that stays the same

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is the stainless steel (shell)," French said. "But there are a lot of people who don't go that far. They'll change a gas valve or an igniter, some small-dollar items. But the big-dollar items, like a conveyor motor, they don't change."

Both men said an oven should be remanufactured to at least the manufacturer's original specs, but that a top-quality remanufacturer will use only brand-new parts. And while a new-equipment dealer may claim not using parts supplied by the manufacturer will result in the loss of the United Laboratories (UL) certification, Bramhall said that's not always true. Companies like his source replacement parts directly from subcontractors who supply original parts to the oven manufactures themselves.

"The bottom line is those key components are already UL listed," he said. "We're buying the same parts the manufacturer's buying, so we're not out of spec."

The loss of the UL badge on refurbished ovens was a concern for several franchisees of Fox's Pizza Den, including Scott Anthony.

"They had heard from new equipment dealers that it could be a problem with their insurance if they didn't have UL certification," he said. "But what we found out was it wasn't as big a concern as the dealer made it out to be. It's a good selling point that makes people feel more comfortable about buying new, but it's not necessarily true."

Even when manufacturers discontinue certain parts as their new models become available, Bramhall said those subcontractors usually continue making parts for older ovens as long as demand remains strong.

French said if a manufacturer claims his oven has been refurbished, buyers should ask which parts were replaced. If he discovers only some have been changed, not only should he find out which old parts remain, but whether they meet

start quoteThe equipment business is a very bad business. There are a handful of really good companies in this business, and most of the rest aren't very good or they're run by thieves. I've seen more people ripped off in this industry than I can remember.end quote

—  Marcus Bramhall Pizza Equipment Supplies Inc.

the manufacturer's specs. A conveyor oven powered by a motor not designed to work in conjunction with all the oven's other parts, for example, will never work at peak efficiency and likely will break down sooner than it should.

The savvy shopper

Few pizza operators — especially new ones — would call themselves oven experts, so those shopping the used market should find a trustworthy dealer who not only rebuilds good products, but stands behind them in case of a failure. The best way to find reputable companies is to ask remanufacturers for customer references, and to network with other pizza operators who've bought used equipment.

"This industry is all about referrals, so word-of-mouth endorsement from their customers is going to be the best," Bramhall said. But even when they find good dealers, operators often don't know exactly how to judge the deals they're offered, he added. "People aren't often comparing apples to apples. One guy's got a cheap offer, but the oven's dirty, it's not refurbished. And he's comparing it to an oven that's more expensive, but it looks brand new and comes with a warranty. They're trying to saving a dollar, but they wind up five dollars foolish."

Don't always let dollars be your only guide, Bramhall said. If a deal sounds too good to be true, it isn't true in the equipment business.

"Check references thoroughly by talking to other people," he said. "If you don't buy your equipment wisely, you'll pay. You'll pay on that Friday night when your ovens go down, and it hits you that this 'good deal' was not a good deal at all."


Topics: Operations Management


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