Kitchen equipment depreciation works like spreading butter on toast - you don't slap it all in one spot, but smooth it evenly across the surface. Just as that €15,000 combi-steamer serves your kitchen for years, not months, you spread its cost across its useful life rather than taking the full hit upfront. Many restaurant owners calculate this wrong or skip it entirely, unknowingly distorting their true profitability.
What is depreciation and why does it matter?
Depreciation spreads a machine's purchase cost over the years you'll actually use it. That €15,000 combi-steamer won't just serve you for one year - it'll work for maybe 10 years. So you divide that €15,000 across 10 years, giving you €1,500 in annual costs.
💡 Example:
You buy a new combi-steamer for €15,000. Lifespan: 10 years.
- Purchase price: €15,000
- Lifespan: 10 years
- Annual depreciation: €15,000 ÷ 10 = €1,500
- Monthly depreciation: €1,500 ÷ 12 = €125
So your P&L shows €125 per month in depreciation costs.
Different depreciation methods
You've got several ways to handle depreciation. For restaurants, straight-line depreciation makes the most sense: same amount each year.
- Straight-line depreciation: Same amount each year (€15,000 ÷ 10 years = €1,500/year)
- Declining balance depreciation: Front-loads more costs in early years, less later (complex and usually unnecessary)
- Annuity method: Factors in interest rates (only for massive investments)
⚠️ Note:
Tax rules sometimes let you depreciate faster than actual lifespan. Chat with your accountant - this can slash your tax bill.
Lifespan by machine type
The lifespan determines how many years you'll spread costs over. Here's what most kitchen managers discover too late - different equipment has vastly different lifespans:
- Combi-steamer, oven: 8-12 years
- Refrigerators, freezers: 8-10 years
- Dishwasher: 5-8 years
- Fryer: 5-7 years
- Small appliances (blender, mixer): 3-5 years
- Cash register system: 3-5 years
💡 Example calculation for multiple machines:
You've purchased the following machines:
- Combi-steamer: €15,000 (10 years) = €1,500/year
- Refrigerator: €3,000 (8 years) = €375/year
- Dishwasher: €8,000 (6 years) = €1,333/year
- Cash register system: €2,000 (4 years) = €500/year
Total annual depreciation: €3,708 = €309 per month
Depreciation on your P&L
Depreciation costs show up on your P&L under other operating costs or as a separate depreciation line. They affect your operating result but aren't cash expenses - you already paid for the machine.
Key points for your P&L:
- Depreciation impacts your profit before tax
- It reduces your taxable profit (you'll pay less tax)
- It's not a cash flow item (no money actually leaves your account)
- Start depreciating once the machine's in use
⚠️ Note:
Depreciation and leasing aren't the same thing. Leasing means monthly rent payments - that's a direct cost. Depreciation spreads a one-time purchase across multiple years.
Residual value and mid-term sale
Sometimes you'll sell a machine before it's fully depreciated. Then you calculate the gap between residual value and selling price:
💡 Example of mid-term sale:
Combi-steamer purchased for €15,000, depreciated over 10 years. After 6 years you sell it for €4,000.
- Depreciated after 6 years: 6 × €1,500 = €9,000
- Book value: €15,000 - €9,000 = €6,000
- Selling price: €4,000
- Loss: €6,000 - €4,000 = €2,000
You record this €2,000 loss in the year of sale.
Administration and registration
Track each machine with these details:
- Purchase date and invoice
- Purchase price including installation costs
- Estimated lifespan
- Annual depreciation
- Cumulative depreciation (total depreciated so far)
- Book value (purchase price minus depreciation)
Many operators use Excel sheets or let their accountants handle this. Tools like KitchenNmbrs can consolidate all costs - including depreciation - into one dashboard.
How do you calculate depreciation? (step by step)
Determine the purchase price
Add up all costs: the machine itself, transport, installation, and any kitchen modifications. This total amount is what you'll depreciate over the lifespan.
Estimate the lifespan
Look at the machine type and intensity of use. A combi-steamer lasts 8-12 years, a dishwasher 5-8 years. When in doubt: choose a conservative estimate.
Calculate annual depreciation
Divide the purchase price by the number of years of lifespan. For monthly costs: divide the yearly total by 12. Record this amount each month on your P&L.
✨ Pro tip
Map out all equipment with purchase dates and remaining depreciation periods over the next 24 months. You'll spot replacement timing and avoid cash flow surprises.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Should I start depreciating from the purchase date or from first use?
From the moment the machine goes into service. Buy in January but don't install until March? Start depreciating in March.
Can I depreciate faster than the actual lifespan?
For tax purposes, often yes - this reduces your taxable profit. For your internal P&L, stick with actual lifespan for honest cost tracking.
What if a machine breaks down earlier than expected?
Record the remaining amount (book value) as a loss in the breakdown year. This creates a one-time cost hit that reduces that year's profit.
Do I also depreciate small appliances like blenders?
Equipment over €450 typically must be depreciated. Smaller amounts can go directly to expenses. Practically: depreciate anything over €500 across 3-5 years.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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