How to start a café in Australia: a step-by-step guide

Most guides to opening a café are a list of things to buy. This one is the order to do things in, what each step costs you in time and money, and where people tend to come unstuck. Each step links to a deeper guide or a free tool, so you can stop here for the overview or go as deep as you need.

If you are weighing up buying an existing café instead of starting from scratch, read buying an existing café alongside this. Most of the steps below still apply.

#Is a café right for you?

It is worth being honest about this before you spend a dollar, because nothing later in this guide makes up for starting with the wrong expectations.

The odds are real. Tourism Research Australia, using ABS business register data, found that of the cafés, restaurants and takeaway food businesses operating in June 2021, only about 51% were still operating in June 2025. That is one of the lowest four-year survival rates of any tourism-related industry; across all tourism businesses it was 56%. Not every one of those "exits" was a failure (a café sold to a new owner can show up as one business ending and another starting), but it is still a sobering number.

The margins are thin. The ATO publishes benchmarks from real tax returns. For coffee shops turning over $250,000 to $600,000 a year, total expenses typically run at 81% to 90% of turnover. The ATO's labour figures exclude the owner's own unpaid hours, which means the 10% to 19% left over is often the owner's wage, not a profit on top of it. A café turning over $450,000 might leave its owner roughly $45,000 to $85,000 for a year of very long weeks.

The hours are long. Cafés open early, and the owner is usually the first in and the last out, especially in the first year. Prep, ordering, rosters, bookkeeping and cleaning happen around trading hours, not instead of them. Plan for six-day weeks and assume you will cover any shift nobody else can.

What helps your odds. Hospitality experience (ideally working in a busy café for a while before you open one), a realistic budget with a cash reserve, a location you have studied rather than fallen for, and a lease you have had checked. None of these guarantee anything. All of them shift the numbers in your favour.

#The timeline at a glance

Most first-time owners underestimate how long opening takes. The phases overlap, and the slowest ones (approvals and equipment) set the pace. These are typical ranges, not promises: your council, your landlord and your builder will decide where you land.

Add those up with sensible overlap and you get roughly six to twelve months from a serious idea to opening day. Taking over an existing café space with an approved food use can be much quicker. A shell that has never been a food business, or one that needs a full kitchen with exhaust, can take longer.

#Step 1: Concept and target customer

Your concept is a short answer to three questions: who is this for, what do they buy, and why would they choose you over the café they walk past now.

Start with the customer, not the décor. "Office workers grabbing a coffee between 7 and 9am" and "parents with prams after school drop-off" need different cafés. One wants speed, a short queue and takeaway cups. The other wants space, seating, a high chair and a menu that works for a toddler.

Pick your service model. Takeaway-focused coffee bars are cheaper to fit out and staff but live and die on volume and location. Eat-in cafés with a kitchen take more money per customer but cost more to build, staff and run. The model also affects which award covers your staff (more on that in Step 10).

Write down what you will not do. A short menu done well beats a long one done adequately, especially in your first year. Every extra dish adds stock, waste, prep time and training.

Look hard at the competition. IBISWorld estimates there were around 27,600 café and coffee shop businesses in Australia in 2025. In most suburbs you will not be the only option. Visit every café within a ten-minute walk of your shortlisted sites at their busy times. Note their prices, their queues, what they do well and what nobody nearby is doing.

The café business plan guide turns this into a written plan, which you will need anyway if you are borrowing money.

#Step 2: Find the location

In a café, location is not one factor among many. It sets your ceiling.

Count the foot traffic yourself. Stand across the street with a clicker on a weekday morning, a weekday afternoon and a Saturday. Count the people walking past on your side, and note which direction they are heading and how many already hold a coffee. Real-estate brochures describe traffic; your own count measures it.

Look at the morning side of the street. People buy coffee on the way to work, the station or school. A site on the side people walk along in the morning can trade very differently from the same shopfront opposite.

Check what generates visits. Offices, schools, gyms, medical centres, train stations and supermarkets all create regular, predictable foot traffic. A strip with empty shops nearby usually has empty shops for a reason.

Check the site can physically be a café. Before you get attached, find out whether it has (or can get) enough power for an espresso machine and kitchen gear, a grease trap or grease arrestor, a way to run an exhaust canopy if you will cook, and a toilet. Retrofitting any of these into a shop that has never been a food business is where fit-out budgets go to die.

Ask the council early. One phone call or pre-lodgement meeting can tell you whether a café is allowed on that site without a new approval. Step 6 explains why this matters.

#Step 3: Run the numbers

This is the step people most want to skip and most need to do properly. You need three numbers: what it costs to open, how much you need to sell to break even, and how much cash you need to survive the build-up.

Startup costs. The range is enormous because cafés are. Hospitality Hub's 2026 fit-out guide puts a kiosk (up to 40 square metres) at around $60,000 to $150,000, a standard 40 to 80 square metre café at $100,000 to $350,000, and a large café at $350,000 to $600,000 or more, with equipment making up 40% to 60% of the spend. On top of the build you will usually need a lease bond or bank guarantee, legal and approval fees, opening stock, pre-opening wages and marketing. The café startup costs guide breaks these down line by line.

Break-even. Your break-even point is the level of sales where what each sale leaves you covers your fixed costs. Here is a worked example with round numbers. Swap in your own.

• Fixed costs per week: rent and outgoings $1,200, wages including super $4,800, everything else (power, insurance, software, accountant, loan repayments) $1,000. Total $7,000 a week.
• Cost of sales (coffee, milk, food, packaging) at 36% of sales, in line with the ATO's averages for coffee shops of 36% to 38%. So each dollar of sales leaves 64 cents towards fixed costs.
• Break-even sales: $7,000 divided by 0.64 = $10,938 a week, before GST.
• At an average spend of $10 per customer before GST ($11 including GST), that is about 1,094 customers a week, or about 182 a day if you trade six days.

Two things to notice. First, at break-even your wages are about 39% of sales before super (the way the ATO counts them), well above its 21% to 32% range for coffee shops of that size. That is normal at break-even, and it is why profit comes from serving more people with roughly the same roster. Second, 182 customers a day is a specific, testable number. Go back to your foot traffic count and ask honestly whether that many of those people will buy from you.

Working capital. New cafés rarely trade at break-even from the first week. You need cash to pay rent, wages and suppliers while sales build. Our view: hold a reserve of at least three months of fixed costs (in the example above, about $91,000) on top of your fit-out budget, plus a contingency of 10% to 20% on the build itself. If that number makes you wince, it is better to find out now than in month four.

#Step 4: Choose a structure and register

Pick a business structure. The main options are a sole trader, a partnership, a company or a trust. A sole trader is simplest and cheapest, but you are personally responsible for everything the business owes. A company is a separate legal entity, which can limit your personal exposure (though banks and landlords often ask for a personal guarantee anyway) but costs more to set up and run. ASIC's company registration fee is $636 from 1 July 2026, plus a $342 annual review fee. Talk to an accountant before you choose: the right answer depends on your income, your partners, your assets and your plans.

Get an ABN and register your business name. Applying for an ABN is free, through the Australian Business Register or the government's Business Registration Service. Registering a business name with ASIC costs $47 for one year or $108 for three years from 1 July 2026. Check the name is not already taken, and check the matching domain and Instagram handle before you print anything.

Register for GST. You must register once your GST turnover reaches, or is expected to reach, $75,000 a year, and you have 21 days from when you become aware of that. Almost every café that is going to survive will pass that threshold, so most register from the start.

Register for PAYG withholding before you pay your first employee, and set up payroll software that reports through Single Touch Payroll each payday.

Insurance. Workers compensation insurance is compulsory once you employ people, and the rules differ by state. Public liability, contents and business interruption insurance are not always legally required, but leases commonly require public liability cover, and a café without it is one slipped customer away from a very bad year.

#Step 5: Negotiate the lease

The lease is probably the biggest contract you will sign, and it outlasts most other decisions. Each state has its own retail leases law, and they differ in important ways.

Read every clause with a lawyer who does retail leases. Both the Victorian and NSW small business commissions strongly recommend independent legal advice before you sign. It is money well spent.

The terms that matter most for a café:

• Term and options. Long enough to earn back your fit-out. A three-year lease on a $200,000 fit-out leaves very little time to recover it. In Victoria, a retail lease must allow for at least five years including options, unless you obtain a waiver certificate from the Victorian Small Business Commission.
• Rent and rent reviews. How and when the rent goes up: a fixed percentage, CPI, or a market review. Model what the rent will be in year five, not just year one.
• Outgoings. Costs you pay on top of rent, such as council rates, water, insurance and building costs. The landlord's disclosure statement should list them with estimates.
• Permitted use. It must clearly allow a café, including cooking if you will cook, and trading hours that suit you.
• Make good. What you must do to the premises when you leave. For a café, ripping out a kitchen and exhaust can be expensive. Budget for it.
• Assignment. Whether and how you can transfer the lease if you sell the business. This is your exit route, so make sure it is workable.
• Security. Landlords commonly ask for a bond or bank guarantee of around three to six months' rent. South Australia caps a cash bond at three months' rent.
• Incentives. A rent-free period during the fit-out, or a landlord contribution to it, is worth asking for, especially on a site that has been vacant for a while.

Know your rights before you sign. Landlords must give you a disclosure statement before you commit (at least 14 days beforehand in Victoria, and at least 7 days in NSW). In Victoria, a landlord cannot ask for "key money" (a payment just for granting or transferring a lease) and cannot charge you its legal costs for preparing the lease. If a dispute comes up later, your state's small business commissioner offers low-cost mediation.

#Step 6: Council approvals and food registration

This is the step with the most moving parts, and the details vary by state and council. The café licences and permits guide goes through them state by state, and the opening checklist lets you tick them off. In outline:

Planning or development approval. If the site's approved use is not already a café or food premises, you may need council approval for a change of use. In NSW, councils have 40 days to decide most development applications; in Victoria, 60 days for a planning permit. Both clocks pause when council asks for more information, so real timeframes are often longer.

Building approval for the fit-out, if the works need one. Your designer or builder will usually handle this.

Food business registration. Every café must register with (or notify, depending on the state) its local council or state food authority before it starts trading, and the premises will usually be inspected. Fit-outs must meet the food premises standard: hand basins, cleanable surfaces, proper storage. Send your plans to the council's environmental health team before building, not after.

Food safety supervisor and trained staff. Since 8 December 2023, national food safety Standard 3.2.2A requires cafés that prepare unpackaged, ready-to-eat food to have a certified food safety supervisor, to make sure every food handler is trained in food safety, and to keep records showing key food safety controls. NSW runs its own food safety supervisor certificate, so check your state's version.

Trade waste. Most water utilities require a trade waste agreement or approval and a correctly sized grease trap before a food business discharges to the sewer. Yarra Valley Water, for example, says the agreement must be in the business owner's name and is not transferable.

Other approvals you may need. Signage, footpath dining permits, a liquor licence if you will serve alcohol, and a music licence if you will play music (OneMusic Australia offers a dining licence for cafés). The Australian Business Licence and Information Service (ABLIS) on business.gov.au will list the licences for your location and activity.

#Step 7: Fit-out

A good fit-out is a workflow first and a look second.

Design the coffee station around the barista. Grinder, machine, milk fridge, knock box, cups and the pass should be within a step or two. The order point and the pick-up point should not create one tangled queue.

Get the services right before the finishes. Your espresso machine needs its own power circuit, a cold water supply and a drain within about a metre. Cooking needs an exhaust canopy and make-up air. A dishwasher, a hand basin and a cool room all need plumbing and power. Finding out mid-build that the building needs a power upgrade is a common and expensive surprise.

Budget per square metre. Hospitality Hub's 2026 guide puts a light refit of an existing café at around $1,500 to $3,000 per square metre and a standard build at $3,000 to $5,000, and notes construction costs are forecast to rise about 4% in 2026. Small sites often cost more per square metre because the services cost the same regardless of floor area.

Get at least three quotes, from builders who have done hospitality fit-outs, and ask to visit one they built. Check what is excluded from each quote. The cheapest quote often leaves out the expensive part.

#Step 8: Equipment and suppliers

The espresso machine and grinders are your most important equipment decision. For most independent cafés, a two-group machine and two grinders (one for your house blend, one for decaf or a single origin) is the starting point. The café equipment guide covers group count, boiler types, power and plumbing, realistic prices, and buying new, used or through a roaster.

Order early. Imported machines and fridges commonly have lead times of 8 to 16 weeks. Order as soon as the lease is signed and your layout is fixed.

Choose your coffee roaster carefully. Your roaster is your most important supplier, and the relationship is more than a price per kilo. A good roaster will help dial in your coffee, train your staff and fix things when they break. Seven Miles, a roaster, estimates most Australian cafés pay around $32 to $38 a kilo wholesale, from about $22 for basic coffee with no support to $42 or more for high-quality coffee with equipment and support included. If a roaster lends you equipment, its cost is built into that price, usually with a minimum weekly order and an exclusive supply agreement. Taste several, ask what support is included, and read any supply agreement as carefully as the lease.

Line up your other suppliers: milk (and plant milks), bakery, produce, dry goods, cleaning chemicals, packaging and waste collection. Ask about minimum orders, delivery days and payment terms. Having a backup for milk and coffee saves you on the day a delivery does not turn up.

#Step 9: Menu and pricing

Keep the opening menu short. You can add dishes once the kitchen is running smoothly. Removing a dish people love is much harder than adding one.

Cost every item before you price it. For each coffee and dish, add up the ingredients and packaging, then price so that your overall cost of sales lands where you planned in Step 3. The ATO's 2023–24 benchmarks put cost of sales for coffee shops at 33% to 42% of turnover, depending on size. A café well above that range is usually under-pricing or wasting stock.

Know the rules that touch your menu. You must be able to tell customers about allergens in unpackaged food, either displayed with the food or when asked, so make sure every staff member knows where that information is. From 1 July 2026, hospitality businesses serving seafood must show whether it is Australian, imported or mixed origin. And since 1 October 2026 you can no longer add a surcharge for card payments, so build card fees into your prices (we covered the arithmetic in the card surcharge ban for cafés).

The café menu pricing guide goes deeper on food cost targets and coffee margins.

#Step 10: Hiring and training

Know which award applies. According to the Fair Work Ombudsman, a café that mainly serves food and drink to eat on the premises, or offers table service, is generally covered by the Restaurant Industry Award. A café that mainly sells for takeaway is generally covered by the Fast Food Industry Award. Check with Fair Work's pay tool if you are unsure, because the award sets pay rates, penalty rates and rostering rules.

Know the baseline costs. The national minimum wage rose to $26.44 an hour from 1 July 2026, and award rates for most café roles are higher. Casuals receive a loading, weekends and public holidays attract penalty rates, and super is 12% on top. Since 1 July 2026, under Payday Super, you must pay super with each pay run and it must reach the employee's fund within 7 business days. The hiring and paying café staff guide explains all of this for a first-time employer.

Hire for attitude, train for coffee. An experienced barista or two will anchor your coffee quality, but warmth, reliability and speed matter as much as latte art for everyone else. Give every new employee the Fair Work Information Statement (and the Casual Employment Information Statement for casuals) when they start, and make sure every food handler has completed food safety training.

Train before you open. Book at least a week of paid training before the soft opening: the coffee recipe, the menu, the POS, opening and closing routines, food safety records and how to answer allergen questions. A written one-page recipe card at the machine prevents a lot of drift.

#Step 11: Systems: POS, accounting and rostering

Setting these up before opening saves you from doing it during your busiest weeks.

Point of sale. For a counter-service café, a simple tablet POS with a card terminal is usually enough. The merchant fee on every card payment usually matters more than the monthly software price. Our honest POS buyer's guide walks through the real costs.

Accounting. Use cloud accounting software connected to your bank account and POS, and get an accountant or bookkeeper involved from day one. You will be lodging business activity statements (BAS) for GST, reporting payroll through Single Touch Payroll each payday, and paying super with each pay run.

Rostering and timesheets. A rostering app that shows the wage cost of each roster as you build it is the simplest way to keep labour in line with sales.

Daily routines. Write opening and closing checklists, a cleaning schedule and the food safety records Standard 3.2.2A requires (such as fridge temperatures and cleaning). These are dull and they are what keeps a café consistent when you are not on shift.

#Step 12: Pre-opening marketing and soft opening

Start telling people before you open. Set up your Google Business Profile with a future opening date, post the fit-out on Instagram, and introduce yourself to neighbouring businesses and nearby workplaces. Our Google Business Profile guide for cafés covers the setup.

Run a soft opening. One to three invite-only sessions with a short menu let your team practise on real people before the public arrives. Invite neighbours, local workers and friends, and ask for honest feedback.

Plan opening week like a stress test. Roster more staff than you think you need, keep the menu tight, and be on the floor yourself. First impressions in week one are the start of your regulars.

The first 100 regulars guide has a full plan for the weeks before and after opening.

#Step 13: The first three months

Opening day is the start line. The first three months decide whether you build the habits, and the customers, that keep you going.

Watch the numbers weekly. Every week, write down sales, customer count, average spend, wages as a percentage of sales, and cost of sales. Compare them with your break-even from Step 3. One bad week means little. A trend over six weeks means a lot.

Know your cash position. Profit on paper and cash in the bank are different things. Keep an eye on what is due in the next month: rent, wages, super, supplier accounts and your first BAS.

Adjust quickly. If afternoons are dead, consider shorter hours. If a dish does not sell, drop it. If the queue is too long at 8am, fix the workflow or the roster before customers give up.

Turn first visits into regulars. Learn names and orders, ask every customer for an honest Google review in the same way, and give people a reason to come back. A loyalty card is the classic way to do that, whether it is paper or a digital card like Back Again, which customers tap at the counter without downloading an app. Our loyalty program calculator shows what a card costs you and what it needs to bring back.

Look after yourself. Burnout is a real risk in the first year. Build at least one day a week into the roster where you are not on the floor, even if you spend it on admin.