Most restaurant owners think depreciation is just an accounting trick - but it's actually the difference between staying profitable and facing equipment replacement disasters. Your €5,000 oven doesn't magically maintain its value forever, and ignoring this reality will crush your margins. Every piece of equipment loses value monthly, and you must calculate these hidden costs into your pricing structure.
What is depreciation and why is it important?
Depreciation tracks how your assets lose value over time. That professional oven you bought for €5,000? After 10 years, it's worthless and needs replacement. You spread that €5,000 across its entire lifespan, factoring a portion into your monthly costs.
💡 Example:
You purchase a combi-oven for €8,000 with an 8-year lifespan:
- Purchase price: €8,000
- Lifespan: 8 years = 96 months
- Monthly depreciation: €8,000 ÷ 96 = €83.33
You set aside €83.33 monthly for this oven's eventual replacement.
Which items require depreciation?
Not every restaurant purchase gets depreciated. Here's what counts:
- Kitchen equipment: ovens, refrigerators, freezers, dishwashers, fryers
- Furniture: tables, chairs, bar setup, storage cabinets
- Technical systems: ventilation, air conditioning units
- Inventory items: plates, cutlery, glassware, cookware
- Fixtures: lighting systems, decorative elements, flooring
⚠️ Note:
Leasing equipment? Skip depreciation entirely - your lease payments are the monthly expense. Depreciation only applies to purchased items.
Standard depreciation periods for restaurants
Different equipment categories have varying lifespans. From years of working in professional kitchens, these periods reflect real-world usage:
- Heavy kitchen equipment: 8-12 years (ovens, walk-in coolers, commercial dishwashers)
- Small appliances: 3-5 years (mixers, blenders, espresso machines)
- Dining furniture: 5-8 years (tables, chairs, booth seating)
- Tableware: 3-5 years (accounts for breakage and wear)
- HVAC systems: 10-15 years (ventilation, climate control)
- Interior fixtures: 5-10 years (lighting, decor, specialized flooring)
💡 Complete calculation example:
Restaurant startup investment: €80,000:
- Kitchen equipment €35,000 (10 years): €291.67/month
- Furniture €20,000 (6 years): €277.78/month
- Tableware €8,000 (4 years): €166.67/month
- Fixtures €12,000 (8 years): €125.00/month
- HVAC systems €5,000 (12 years): €34.72/month
Total monthly depreciation: €895.84
Including depreciation in cost calculations
Monthly depreciation amounts become fixed costs you must cover through revenue. Like rent and insurance, spread these costs across your expected monthly covers.
💡 Example:
€895.84 monthly depreciation with 2,000 covers:
- Depreciation per cover: €895.84 ÷ 2,000 = €0.45
- Add this to food costs and labor expenses
With €25 average checks, depreciation represents 1.8% of revenue.
Practical depreciation management
Simplify the process with organized tracking:
- Document all purchases with dates and prices
- Assign realistic lifespans to each item
- Calculate monthly amounts and total them
- Update records for new purchases
- Transfer depreciation amounts to replacement funds monthly
⚠️ Note:
This isn't tax advice. Tax depreciation follows different rules. Consult your accountant for tax implications.
Depreciation versus replacement reserves
Depreciation serves dual purposes: calculating true costs and building replacement funds. Most restaurant owners nail the first part but ignore the second - creating financial disasters later.
Move calculated depreciation amounts into separate savings accounts monthly. You'll have funds ready when equipment fails or reaches end-of-life.
How do you calculate depreciation? (step by step)
Create an inventory list of all purchases
Note all equipment, furniture and inventory you've purchased with the purchase price and date. Don't forget small items - dishes and pans count too.
Determine the lifespan for each item
Realistically estimate how long each item will last. Use standard periods: heavy equipment 8-12 years, furniture 5-8 years, dishes 3-5 years.
Calculate the monthly depreciation per item
Divide the purchase price by the number of months of lifespan. Add up all monthly amounts for your total monthly depreciation.
✨ Pro tip
Set up automatic monthly transfers of exactly €895.84 to a dedicated equipment replacement account within 72 hours of calculating your depreciation. This prevents you from accidentally spending replacement funds and ensures equipment failures don't derail your cash flow.
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 include VAT in depreciation calculations?
For cost calculations, use the VAT-inclusive price - that's your actual expense. Tax depreciation follows different rules, so discuss specifics with your accountant.
What happens if equipment fails before its expected lifespan?
You absorb the loss on that investment. Adjust future depreciation periods based on experience - perhaps 10 years was overly optimistic for that brand or usage level.
Can I modify depreciation rates if revenue drops?
Depreciation remains a fixed cost regardless of revenue changes. However, per-cover depreciation increases with fewer guests, affecting your unit economics.
How do I depreciate secondhand equipment purchases?
Start with your purchase price and estimate remaining lifespan. A 5-year-old used oven might depreciate over 5 years instead of the standard 10-year period.
Are repairs and maintenance part of depreciation?
No, these are separate operating expenses. Depreciation covers replacement costs, while maintenance extends equipment to its expected lifespan.
Should I depreciate equipment differently during slow seasons?
Depreciation stays constant year-round since equipment ages regardless of usage intensity. Seasonal revenue fluctuations don't change the underlying asset deterioration rate.
📚 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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