Cover tactics: manufacturer warranties

Let’s face it, the very mention of the word ‘warranty’ is enough to frustrate and appease commercial kitchen operators in equal measure.

While no equipment owner likes to consider the possibility that they might need to exercise their warranty because a vital piece of kit has gone down, the reality is that a good warranty package will provide peace of mind in an era where the emphasis is on making investments go further.

Manufacturers have been quick to recognise that customers value support, especially if it’s carried out with minimal disruption and means they can get on with their core business, culminating in several offering the sort of lengthy warranty terms that would have raised eyebrows just a few years ago.

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One-year warranties used to be standard fare in the catering equipment and refrigeration market, but that is quickly changing as suppliers bid to show they have absolute confidence that their kit can stand up to the rigours of the professional kitchen.

Dealers are reaping the benefits of this too, particularly when they encounter situations where two items are comparable on features, performance and price. Assuming it doesn’t compete with their own services offering, the extra security that a multi-year warranty provides could be a deal clincher.

While warranties present an obvious cost for a manufacturer, Glenn Roberts, managing director of Gram, believes it is a necessary investment that underlines a brand’s credibility.

Gram offers a five-year parts and labour warranty on its Plus, Twin, Midi, Euro, Gastro 07/08 and Compact lines, while it aims to make spare parts available for up to 10 years after purchase, even on models no longer in production.

“In the year 2000 we were the first refrigeration company in Europe to offer a full three-year parts and labour warranty. At that time the market and our competitors were sceptical about offering this to the market,” he reflects. “In February 2010, we took this offer to five years at a time many were offering no more than two years. As the first manufacturer to offer a full five-year parts and labour policy on multiple ranges, you can rest assured that Gram will continue to review the support it gives to its product range.”

Another brand now offering a five-year warranty on parts and labour is True Refrigeration after it recently added a further two years to its UK and Ireland policy. It believes the move gives it a distinct competitive advantage in a market where support is a big factor in customers’ buying decisions.

“Even with equipment manufactured to the highest standards, problems can still occur from time to time. It isn’t something anyone can predict, and previously this would be a risk that the customer would be forced to take,” notes True’s UK marketing director John Lilly.

“Today, specifiers are fortunate in that they have a choice of whether or not they risk having a unit break down, out of warranty, after a couple of years, or choose equipment from a manufacturer which guarantees continued dependability through a longer warranty.”

One widely-held view is that five-year warranties will work better for some products than others. Manufacturers producing equipment that contains few moving parts and a high level of automation — leaving little room for human error or misuse, which, after all, is the most common cause of breakdown — can arguably ‘afford’ to offer a longer warranty without worrying that it could eat into their profit margins.

“There’s also the question of what’s economical, not only for the manufacturer or distributor but also the customer,” points out Paul Crowley, marketing manager at Winterhalter. “There are warewashers manufactured seven years ago that are as not economical to run as their modern counterparts, so even if that machine had a warranty, the customer would be financially better off running a more modern machine.”

Fellow warewashing brand Meiko recently introduced a three-year, all-inclusive ‘no bills guarantee’ on its premium machines. UK MD, Bill Downie, insists this represents a major development for the market given that manufacturers have historically been very secretive about the cost of warranties.

“In this industry there are a lot of smoke and mirrors around when it comes to warranty,” he says. “Manufacturers are very willing to give a three-year warranty, but they are not all inclusive. Clients will always complain that they’ve got a three-year warranty from this or that manufacturer but they still get bills every month and everything is ‘customer misuse’ or ‘no fault found’. We have tried to clear that smoke up with a fully transparent and open policy.”

The world of warranties, if it wasn’t obvious already, is rarely black and white. Ian Harrington, service manager at DC Products, says it can be a complex area with a number of factors at work.

“Fixed warranties, for example, are usually built into the sales price, so it doesn’t necessarily mean that product will be more reliable but that warranty provisions have already been allocated. The trading style of the individual dealers also has an impact. We have service-focused dealers who don’t want more than a one-year parts-only warranty — as it may be detrimental to their revenue stream long term — and sales-oriented distributors who will regularly take out two- or three-year parts and labour warranties. Ultimately each customer is unique and we try to cater for that.”

Harrington says that DC offers a basic one-year parts and labour warranty on its warewashing range and three years on its ice machines. However, because it sells exclusively through the trade, it is able to provide dealers with extended warranties, allowing them to select any combination of parts and labour they want between one and five years.

Simon Mallet, regional service manager at Electrolux, agrees that from a channel point of view, a dealer’s perception of warranty will depend largely on the market place they operate in.

He says: “A project company may be less concerned about a warranty offering. However, those looking at one-off unit sales would be more likely to consider a manufacturer’s warranty as a useful sales tool — as long as they don’t offer their own that is. Furthermore, a good warranty shouldn’t affect the replacement market. Most products these days should be built to last more than five years, regardless of warranty.”

So just how accurate would it be to say that a manufacturer’s confidence in its product is reflected entirely by the length of its warranty? And does anything less than a two-year warranty in today’s market raise question marks over a product’s durability?

Gram’s Glenn Roberts suggests there is “some weight” behind this argument, particularly where budget refrigeration cabinets built with cheaper components are concerned. “They can often require costly and time-consuming corrective work, even within the first 12 months of operation,” he says. “This can explain why some manufacturers and importers are reluctant to offer more than a one- or two-year parts and labour warranty. Sometimes this is even restricted to parts only, which can also be compromised by the lack of spare parts support and availability with budget products.”

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Others though, such as Winterhalter’s Paul Crowley, are adamant that there is no correlation between the length of the warranty and the quality of the product.

“When you’re purchasing a piece of equipment, you’re investing in a brand, its R&D, the engineering and performance — the overall reputation,” he argues. “Hyundai cars offers a seven-year warranty on some of their vehicles, Mercedes offers three years. Which is the better product? Once the finer detail and T&Cs are examined there are normally some caveats that cost the customer somewhere along the line.”

David Watts, senior manager of Samsung Professional Appliances, agrees that there is little evidence to support the theory that warranty length is linked purely to product durability, adding that things like parts availability, machine replacement and nationwide cover are key criteria in their own right.

As far as warranties go, he claims the formula is very simple. “The length of warranty is based on two factors: the likely failure rates and the profit margin. Even if the product is of poor reliability, if the margin is high enough then the manufacturer can absorb high failure rates,” says Watts.

At Hobart, all warranty work is carried out by the company’s team of nationwide technicians. A spokesperson for the Peterborough-based company’s services division said that a warranty period provides an opportunity for a manufacturer to demonstrate how their service provision can perform should a unit fail or be broken.

Hobart, therefore, looks upon this aspect of the business as an opportunity rather than a cost. As far as longer term cover goes, it notes that all mainstream suppliers now offer extended warranties.

“This purely gives the customer a choice of who to use for service after the first year,” says the spokesperson. “All free extended warranties should be reviewed very carefully to ensure they provide the equivalent cover to the first-year warranty and that there are no conditions to this extension which might cost more than actually just getting an alternative service provider to supply a parts and labour contract.”

It’s clear that warranty length is just one facet of the overall after-sales support package. Just as significant are the terms and conditions attached to the cover. It’s little use an operator having a five-year warranty if they don’t know what the activation clauses are or whether there are any caveats that will potentially invalidate it.

“A degree of equipment maintenance is unavoidable, no matter the product,” says True’s Lilly. “Kitchen operators need to be aware that this is essential to ensuring equipment continues to perform efficiently and safely. Fortunately, the routine items like condenser coil and gasket maintenance aren’t demanding and manufacturers do a lot around education and training to make sure operators know about this stuff and understand its importance.”

The onus, it has to be said, is on manufacturers to be as clear as possible on what the warranty package covers and what is excluded.

Meiko’s Downie insists end-users should be demanding total transparency from suppliers when taking on a warranty: “No bills guarantee is what a customer should be asking their warewahsing supplier for. They should be saying, ‘I want to buy a machine and I want a three-, five- or one-year warranty — whatever the case maybe — and I don’t want to have a bill during that period. Give me a price for it.’”

Terms of engagement

Check the small print! That’s the advice that distributors should be giving to their customers when they sell or recommend a warranty package, according to the market.

Concerns that some policies look good from the outside but are fraught with catches or clauses is one of the reasons why so many buyers remain sceptical about warranties.

“Most warranties will have some limitations, for example they’re unlikely to cover machine misuse or damage caused by incorrect installation, use or maintenance — and rightly so — but some are definitely less culpable than others when it comes to genuine claims, so look carefully at the small print and be particularly beware of return-to-seller warranties,” says

Ian Harrinton, service manager at DC Products. “These may work well for smaller items but can cause a host of issues for larger capital equipment items such as dishwashers, from both an uninstalling and packing, and business interruption view point. The customer could find themselves left without a working machine for weeks rather than hours unless they are wary.”

Paul Crowley is suspicious of warranties that span more than a couple of years, suggesting that there are usually tie-ins which effectively mean the customer is still funding the warranty.

“Manufacturers or distributors can’t offer these warranties for ‘free’— it doesn’t make commercial sense — and end-users must realise this. We can offer warranties over our regular 12 months, on an extended warranty basis which the customer pays for, but with no hidden agendas or caveats. Back-up service and support are vital. Buyers should check first-time fix rates, response rates and that the manufacturer runs its own nationwide team of expert engineers, using genuine parts.”

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