Cafe Profit Margins in Australia: What's Normal in 2026

Search for cafe profit margins and you will find two very different answers. Some sites say 2% to 6%. Others say 10% to 15%. Almost none of them show where the number comes from.

We went looking for the numbers that can be checked. The best source is the Australian Taxation Office (ATO), which publishes the expense ratios of coffee shops from their tax returns. This post uses that data, adds what the research says elsewhere, and works through a real example.

We are the team behind Back Again, a loyalty platform for independent businesses, so we finish with how to lift your margin.

Where $100 of cafe sales goes

Take a cafe turning over $400,000 a year. The ATO's benchmark ranges for that size are below. The middle column is the mid-point of each range, which gives you a picture of an ordinary cafe, not a target.

On $400,000 of sales, that leftover is about $58,000. Two cautions. The "everything else" line is what remains once you subtract the other three from the ATO's total, so it is our calculation. And the ranges do not add up neatly, because no cafe sits at the top or bottom of every range at once.

The leftover is not the owner's take-home. It is before income tax, and it includes the owner's own pay. The ATO's method excludes payments to associated persons from expenses, and the ATO page does not say how owner wages are treated. If you work the machine yourself and pay yourself nothing through the business, that leftover is partly your wage.

What is a good profit margin for a cafe in Australia?

Somewhere between 10% and 20% of sales left over is typical for a mid-sized cafe. Above that is strong. Below 10% is tight. Here is the ATO data in full, for coffee shops that sell coffee, tea, other drinks and food. It does not cover coffee carts or vans.

Source: ATO small business benchmarks, coffee shops, 2023-24 tax return data, page updated 16 March 2026. The "left over" column is our subtraction from the ATO's total expenses ratio.

Two patterns stand out.

Bigger cafes keep a smaller share. The cafes under $250,000 keep the most, which is probably because the owner is the barista and does not draw a wage as an expense. The largest cafes spend more on staff, so they keep a smaller percentage of a larger amount. That is a reasonable reading of the table, not something the ATO states.

Rent falls as a share of sales when you sell more. The same lease costs a smaller share of $600,000 than of $200,000.

What is the average profit for a cafe in Australia?

There is no single official figure, because the ATO publishes expense ratios, not profit. The other numbers you will see come from three kinds of source.

Industry research. IBISWorld puts the cafe industry's net profit at 7.6%, according to a 2024 article by UniSA's Dr Emma Felton, republished from The Conversation. The same article gives the average Australian business margin as 13.3% and estimates about $22,800 a year in profit for a cafe turning over $300,000. That is the article's own calculation, not a survey result. An earlier IBISWorld report, from July 2020, put the margin at 2.0% for 2019-20.

Older benchmarks. The same article notes that cafe margins were "as high as 20%" in the early 2000s, with no source given.

Roasters and software vendors. Many posts quote figures such as 2% to 6% net for the average cafe and 10% to 15% for a well-run one. These are useful rules of thumb, but the ones we checked cite no data. We have not relied on them.

Put side by side, they roughly agree: a typical independent cafe keeps a single-digit to low-teens percentage after expenses, and the owner's pay has to come from it.

Where the money goes: the big three

Cost of sales: 33% to 42% of sales. This is coffee, milk, food and packaging. It is the line you can manage week to week, because it moves with what you buy, what you waste and what you charge. It does not include wages in the ATO's measure.

Staff: 21% to 35%. Wages are the cost that rises whether you are busy or not. Minimum award wages went up 4.75% from the first full pay period on or after 1 July 2026, according to the Fair Work Commission's decision. Weekend and public holiday penalty rates add to the cost of a shift on the days cafes are busiest.

Rent: 6% to 17%. Rent is fixed, so it is the line that punishes a quiet month and rewards a busy one.

How much profit is made on a cup of coffee?

A lot before wages, much less after. Fish River Roasters published a worked example in July 2024 for a single-shot flat white sold at $5.00. It is a few years old and wages have risen since, but the shape still holds.

Ingredients here are about 21.5% of the ex-GST price, which fits the roaster benchmarks of 20% to 25% for coffee alone. It is lower than the ATO's 33% to 42% because the ATO figure covers the whole menu, including food, which costs more to make.

The line to look at is the last one. The barista costs the same whether they make 100 cups or 200. A cafe's profit is decided less by the margin on each cup than by how many cups it sells through the same hours. Our post on what Australians pay for coffee has current prices, and filling the quiet hours covers the other half.

How much does a cafe owner make?

It depends on size, and on how much of the work the owner does. Using the ATO ranges, here is what is left over, before tax, at three example turnovers:

This is what the business keeps. If the owner also works full time in the cafe, a good share of it is pay for that work, not return on the investment. At the smaller end, much of the leftover is the owner's wage. If you are thinking about buying or opening a cafe, work out what would be left after paying a manager for the hours you would not work yourself.

How to work out your own margin

You need your last 12 months of sales and expenses, which any accounting software gives you.

1. Start with sales excluding GST. Every figure above uses it.
2. Work out your cost of sales. Divide what you spent on coffee, milk, food and packaging by sales. Compare it with 33% to 42%.
3. Work out staff. Include super and on-costs, and include yourself at a fair wage for the hours you work.
4. Add rent and everything else, then subtract the total from sales. What is left is your margin.
5. Add cost of sales and staff together. This is sometimes called prime cost. Using the ATO ranges it works out at roughly 56% to 73% for mid-sized cafes. If yours is above that, there is not much left for rent and everything else.

Do it monthly if you can. A cost that creeps up is easier to fix in the month it starts.

How can a cafe improve its profit margin?

Each lever below moves one line of the table above.

Revisit prices once a year. A small increase on your best sellers lifts every sale. Check what neighbours charge first, and keep the price of your most visible drink in line with the local range.

Cut waste before you cut quality. The ATO lists higher wastage as one possible reason a business sits above the cost-of-sales range. Track it for a fortnight and you will see where it goes.

Simplify the menu. Fewer ingredients means less waste and faster service. Look at which items sell a lot and make you the most, and drop the slow, low-margin ones.

Roster to the day. Your busiest hours justify your best-staffed shifts. Quiet shifts cost the same as busy ones, so line them up with your sales data, not habit.

Raise the average order. A pastry with the coffee adds a sale without adding a customer or a dollar of rent. See how to increase average spend.

Win the people who already like you. Rent and base staffing are the same whether a regular visits twice a week or three times. That extra visit adds sales without adding rent. See how to get repeat customers and loyalty program ideas that work.

Watch your payment costs. The end of card surcharges changes what a card sale costs you. We worked through it in the card surcharge ban for cafes.

If you want a loyalty card that runs itself, Back Again is a tap-to-stamp card with no app for customers, plus win-back and birthday emails. It is free until your first 50 customers, then $39 a month in Australian dollars. See how it works.

Frequently asked questions

What is a good profit margin for a cafe in Australia?

For a mid-sized cafe, between 10% and 20% of sales left over after expenses is typical, based on the ATO's 2023-24 coffee shop benchmarks. For cafes turning over $250,001 to $600,000, the ATO ranges leave about 10% to 19%. That is before income tax and before paying the owner for their own work.

What is the average profit for a cafe in Australia?

The ATO does not publish an average profit, only expense ratios. Working from those, cafes keep roughly 7% to 27% of turnover depending on size. IBISWorld, quoted in a 2024 article, puts the industry's net profit at 7.6%, or about $22,800 on $300,000 of turnover.

Do cafes make good profit?

Most make a modest one. After ingredients, staff and rent, a typical cafe keeps a low-teens percentage of sales, and the owner's own pay comes out of that.

Is a 30% profit margin good for a cafe?

As a net margin it would be exceptional. The ATO's coffee shop ranges leave 7% to 27% of turnover after expenses, and 27% is at the very top for the smallest cafes. As a gross margin it would be low, because after cost of sales most cafes keep about 58% to 67% of sales.

How much profit is made on a cup of coffee?

In a 2024 worked example from Fish River Roasters, a $5.00 flat white costs 98 cents in ingredients and packaging, leaving $3.57 before staff and $2.22 after staff on a busy shift. On a quiet day it falls below a dollar, because staff cost the same regardless of cups sold.

What is the average profit margin for coffee shops in Australia?

The ATO's data leaves 7% to 27% of turnover after expenses, with the smallest cafes at the top of that range. IBISWorld's industry average is 7.6%, from a 2024 article. Vendor blogs often quote 2% to 6% or 10% to 15%, usually without a source.

How much does a cafe owner make in Australia?

It depends on turnover and on how much work the owner does. Using the ATO ranges, a cafe with $400,000 in sales keeps about $40,000 to $76,000 before tax, and that includes the owner's own pay. Smaller cafes keep a higher percentage but a lower dollar amount.

How much does an average coffee shop make a day?

The ATO does not publish a daily figure. A cafe with $400,000 in yearly turnover averages about $1,100 a day across the year, and keeps roughly $110 to $210 of that after expenses, based on the ATO ranges.

What are the biggest costs for a cafe?

Cost of sales (33% to 42% of sales), staff (21% to 35%) and rent (6% to 17%), according to the ATO's 2023-24 coffee shop benchmarks. Together they take most of every dollar.

How can a cafe increase its profit margin?

Review prices yearly, reduce waste, simplify the menu, roster to your busy times, raise the average order and bring regulars back more often. Each moves a different line in the ATO table.

What does the ATO benchmark mean if my cafe is outside the range?

It means your expenses look unusually high or low against your sales. The ATO suggests checking for causes such as wastage, expenses filed under the wrong label or incomplete sales records.

Where that leaves you

For a typical cafe, about $85 of every $100 goes out the door, and the rest has to cover the owner. A few dollars saved on waste, a better roster or one more visit a month from your regulars lands in that last $15.

Sources, checked 3 November 2026: ATO small business benchmarks for coffee shops, how the ratios are calculated and what being outside the range means; UniSA / The Conversation article by Dr Emma Felton (IBISWorld figures, 2024); the IBISWorld Cafe and Coffee Shops Services industry report (July 2020); Fish River Roasters (July 2024); and the Fair Work Commission's 2026 annual wage review. The ATO benchmarks are a guide drawn from tax return data and may change each year. The "left over" figures are our calculation from the ATO's total expenses ratio, and the $100 example uses mid-points of ranges, so it is illustrative. This is general information, not financial advice.