What should I ask about a restaurant equipment distributor’s showroom stock?

A showroom can look full while holding little that moves. Start by walking it with the inventory list. Mark each piece as new stock, display or consignment. Ask about discontinued models and units that have been on the floor a long time, since newer versions may have replaced them.

Then ask about ownership and terms. Some suppliers lend display units or take back unsold ones; others require payment regardless. Read the supplier agreements, and ask whether the arrangement changes when the business is sold. Find out whether any stock is financed, and whether the supplier has a claim on it.

Next, look at condition. Scratches, missing parts and worn demo models can reduce what a piece can fetch, and the books may not reflect that. Ask how often display stock is sold off and at what discount, and look at those sales for a pattern. A good showroom also helps customers choose, so ask whether it actually leads to sales. Your accountant can advise on how display and slow stock should be carried, and your lawyer can read the supplier terms. Ask who chooses what goes on the floor and how often it changes.

Key takeaways

• Mark every piece as new stock, display or supplier consignment.
• Read supplier terms for returns, ownership and change of owner.
• Check how long pieces have sat and how display stock is cleared.
• Ask whether any display stock is financed, and whether a supplier holds a claim on it.