Repair or Replace

Equipment fails, a technician quotes a repair, and someone approves it because the alternative is a capital request and a closed kitchen. Repeat this four times and the operator has paid for a new unit and still owns the old one.

The information the decision needs

Cumulative repair cost on this asset, over its life or the last two years.

Replacement cost, including installation and disposal.

Age against expected life.

The quoted repair cost.

The failure history — the same fault repeatedly, or unrelated faults.

Energy consumption, where newer equipment is materially more efficient.

Downtime cost if it fails again.

Most operators can produce the fourth item and none of the others, which is why the asset register and work order history matter more than any decision framework.

A workable threshold

Set it in advance so the decision is not made under pressure.

Replace if the quoted repair exceeds a defined share of replacement cost — commonly a third to a half, depending on age.

Replace if cumulative repairs over two years approach replacement cost.

Replace if the asset is beyond expected life and the repair is significant.

Replace if the same component has failed twice.

Replace if the repair is temporary and a permanent fix requires more work.

Repair if the asset is young, the failure is a one-off, and the cost is modest.

The exact percentages matter less than having them written down. A threshold agreed in a calm meeting produces better decisions than a judgement made during service.

The traps

The sunk cost trap. "We have already spent so much on it." Money spent is gone and it is not an argument for spending more.

The capital budget trap. Repairs come from operating budget and replacements from capital, so repeated repairs are approved and replacement is deferred. This is a budgeting artefact producing a worse outcome, and it is extremely common.

The technician's incentive. A contractor quoting a repair earns from the repair. This is not dishonesty; it is a reason to have your own threshold rather than relying on their recommendation.

The efficiency blind spot. Refrigeration and HVAC from fifteen years ago consume substantially more energy. The running cost difference over a few years frequently exceeds the price difference between repair and replacement, and it never appears in the repair decision.

The cascade. Replacing a compressor on a unit whose condenser, controls and door seals are all the same age buys a short reprieve.

When repair is clearly right

Under warranty. Check first, every time.

Recent equipment with an isolated failure.

A simple component — seal, thermostat, contactor, fan motor — on an otherwise sound unit.

Where replacement requires work the site cannot absorb now — electrical upgrades, structural changes, extended closure. This is a legitimate reason to repair and defer, and it should be recorded as a deferred replacement rather than forgotten.

When replacement is clearly right

Refrigerant leaks that recur.

Compressor failure on an old unit.

Any repair requiring parts no longer manufactured, where the technician is sourcing used components.

Equipment that has become a safety issue — fryer tank leaks, damaged electrical, failed safety devices on old controls.

Equipment that cannot meet a current requirement, such as temperature holding or sanitiser concentration.

Planning replacements rather than reacting

Maintain a replacement list ranked by age, failure history and criticality.

Budget for it annually as a normal expense rather than an exception.

Replace during planned closures where possible, which removes downtime cost and usually improves the price.

Buy ahead for critical assets where lead times are long. A walk-in condensing unit ordered after failure is a different situation from one held in stock or on a supplier's commitment.

A replacement plan converts an emergency capital request into a scheduled purchase, which is cheaper in every dimension: the equipment, the installation, the downtime and the internal argument.

Building the replacement list

The document that converts emergency capital requests into planned purchases.

From the asset register, rank by: age against expected life, cumulative repair cost against replacement value, failure frequency, criticality to service, and energy consumption where the difference is material.

Add refrigerant type for refrigeration, because units on phased-out refrigerants have a shortening economic life regardless of condition.

Assign each a year. This year, next year, the year after, monitor.

Cost it, including installation and disposal.

Review quarterly against work order history, and move items forward when the history says so.

Present it annually to finance as a rolling plan rather than a series of requests. A backlog presented consistently gets funded eventually; the same items requested individually after each failure do not.