The short answer
Australian coffee shops spend 33–42% of turnover on ingredients and packaging (the key benchmark), 21–35% on wages and 6–17% on rent, depending on size. Total expenses average 79% of turnover in the smallest band, 86% in the middle and 89% above $600,000. For sole traders and partnerships the owner’s own pay is not an expense on the tax return, which is why the smallest turnover band shows so much left over: much of it is the owner’s wage.
Coffee shops: ATO benchmark ranges, 2023–24
| Annual turnover | $65,000 – $250,000 | $250,001 – $600,000 | More than $600,000 |
|---|---|---|---|
| Cost of sales ÷ turnover (key benchmark) | 34–42% | 35–41% | 33–38% |
| Average | 38% | 38% | 36% |
| Total expenses ÷ turnover | 73–86% | 81–90% | 86–93% |
| Average | 79% | 86% | 89% |
| Labour ÷ turnover | 21–32% | 21–32% | 27–35% |
| Rent ÷ turnover | 10–17% | 8–14% | 6–10% |
| Motor vehicle ÷ turnover | 2–4% | 1–2% | 1% |
Source: ATO small business benchmarks, coffee shops, from tax returns for the 2023–24 financial year (page updated 16 March 2026).
What the ranges tell a café owner
- Cost of sales barely moves with size (36–38% on average). A café above 42% has a pricing, waste or supplier problem, not a scale problem.
- Rent falls fast as turnover grows, from 10–17% to 6–10%. The same lease is cheap for a café doing $700,000 and crippling for one doing $250,000.
- Wages rise in the largest band (27–35%) as owners step back and pay managers.
Worked example: a suburban café, $480,000 turnover
| Line | A year | % of turnover | ATO range ($250,001 – $600,000) | Where it sits |
|---|---|---|---|---|
| Cost of sales | $211,200 | 44.0% | 35–41% | Above |
| Total expenses | $450,000 | 93.8% | 81–90% | Above |
| Labour | $177,600 | 37.0% | 21–32% | Above |
| Rent | $52,800 | 11.0% | 8–14% | Inside |
Rent is fine. Cost of sales three points above range and wages five points above it take the café from a typical 14% left over to about 6%. The first fixes are the price of the top ten items and the quiet-hour roster.
Where cafés usually leak
- Coffee priced like it was in 2022. Milk, beans and cups have risen; a 30-cent rise on the most common drink is worth more than any cost cut.
- Waste and comps that never reach the till: day-old food, staff drinks, remakes.
- Full staff from open to close when most trade is 7–10 am and lunch.
- Weekend penalty rates not covered by a surcharge.
See where your business sits, from your bank statement
Upload a CSV or PDF of your business bank account (3 to 12 months). The health check rebuilds what you really earn, compares each cost with businesses like yours, and shows where money is leaking and who owes you. Free to run: you see how much is at stake before you pay anything.
Any bank, any currency. The file is read once and not kept. Full report from $149.
Opening a café instead?
If you are still deciding, these ranges are the right starting assumptions for a plan. The café feasibility guide shows how to test a site and a budget before signing a lease.