The Australian Taxation Office publishes small business benchmarks for cafes and restaurants, built from the tax returns and activity statements of thousands of real businesses. They are grouped by turnover band, so a cafe turning over $200,000 is measured against similar cafes, not against a large multi-site operator.
This guide covers what the cafe benchmarks measure, the rough shape of the current ranges, and how to use them to test your own numbers before you commit to a lease.
What the ATO cafe benchmarks actually measure
The benchmarks are expressed as ratios against turnover, which lets you compare your cafe to the industry regardless of size. For cafes the ATO publishes two.
| Cost of sales to turnover | Food and beverage stock as a share of sales (your cost of goods) |
| Total expenses to turnover | All business costs combined as a share of sales |
The ATO reports each as a range, grouped by annual turnover band. Always pull the current figures for your own band directly from the ATO small business benchmarks, because the published numbers are revised each year.
The ATO does not publish a labour benchmark for coffee shops. Any labour percentage you see quoted for cafes is an industry guideline, not an ATO figure. We cover where labour fits in Step 03.
The benchmark ranges by turnover band
The ATO cafe benchmarks move with turnover, so read the row for your own band rather than a single headline figure. These are the current published ranges. Confirm them on the ATO site before you rely on them, as they are revised each year.
| Annual turnover | Cost of sales | Total expenses |
| $65,000 to $250,000 | 34 to 42% | 74 to 86% |
| $250,000 to $600,000 | 35 to 40% | 81 to 90% |
| Over $600,000 | 33 to 38% | 85 to 92% |
Total expenses climb as a share of turnover in the higher bands, which is normal: larger cafes carry more staff and structure, leaving a thinner but higher-volume margin. A specialty coffee focused cafe and a full-kitchen brunch venue will still sit at different points inside their band, so the value is in knowing where you fall and why.
Where labour fits (an industry guideline, not an ATO benchmark)
Labour is one of the biggest costs a cafe carries, so founders expect an ATO benchmark for it. There is not one. The ATO does not publish labour benchmarks for coffee shops, so treat any labour percentage you see quoted for cafes as an industry guideline rather than an ATO figure.
As a working guide, many profitable cafes aim to keep total labour costs, including wages, superannuation, and payroll-related costs, within roughly 26 to 33 percent of turnover. Where you land depends on your service model and how tightly you roster to demand.
No single number decides whether a cafe is healthy. Read cost of sales, labour, and overheads together. A cafe running labour at the top of the guideline can still be sound if its cost of sales and overheads sit comfortably inside their ranges.
Why cafe founders should care before opening
The benchmarks are most valuable before you trade, when the numbers in your plan are still assumptions you can change cheaply.
They validate your projections
If your cash flow model assumes a cost of sales of 25 percent while the benchmark for your band is closer to 38 percent, your projected profit is fiction. Testing your numbers against the benchmarks early stops you building a plan on optimistic figures.
They flag problems while they are still cheap to fix
A cost of sales drifting above the benchmark in your first quarter is a signal to review recipe costing or pricing now, not after a year of thin margins. Small corrections early beat a menu rewrite later.
They strengthen a bank application
Lenders recognise ATO benchmarks. A funding request that shows your projected ratios sitting inside the published ranges reads as credible and grounded, not hopeful.
They reduce review risk
The ATO uses these same benchmarks to identify businesses reporting outside the expected range. Sitting inside the range for your industry is one less reason to attract attention.
How to use benchmarks in your own planning
Turning the benchmarks into a working check takes four steps.
- Find your turnover band on the ATO benchmarks page and note the cost of sales and total expenses ranges.
- Calculate the same ratios from your own projections, or from your actuals if you are already trading, and work out your labour percentage alongside them.
- Compare each ratio to the range. Anything outside it is a question to answer, not automatically a mistake, but always a prompt to check your assumptions.
- Trace any gap to its driver: recipe costing for cost of sales, rostering and award rates for labour, and your fixed cost list for overheads.
Benchmarks describe averages, not targets. If your overheads justify a cost of sales two points below the average because your rent is high and your prices reflect it, that is a healthy cafe sitting inside a wide range for a good reason. Use the benchmark to spot gaps you cannot explain, not to force every ratio to the middle.
Where the benchmarks fit alongside your other numbers
No single benchmark decides whether a cafe is financially healthy. Read cost of sales, labour, and overheads together to judge overall performance. The ATO ratios line up closely with the operating numbers experienced cafe operators track week to week.
| Cost of sales (food and beverage, ATO) | 33 to 42% by turnover band |
| Labour (incl. super, on-costs, industry guideline) | 26 to 33% |
| Rent and outgoings | 8 to 12% |
| Other operating expenses | 15 to 20% |
| Net profit margin (year 2 onward) | 5 to 10% |
If your cost of sales is on benchmark but the cafe still is not making money, the problem is elsewhere: labour too high, rent too high, average spend too low, or revenue too thin. The benchmarks tell you which ratio to look at first.
HospoSure builds cost of sales from real recipe costing, models labour and over 50 common cafe overheads against projected turnover, and shows each ratio against the benchmark ranges as you plan. When you approach a lender, the bank-ready report shows your projected numbers sitting inside the published bands, from day one.
Start building your planUsing ATO benchmarks well
A founder who uses the benchmarks properly:
- Reads the ranges for their own turnover band, not the headline industry average.
- Pulls the current-year figures from the ATO site rather than a number quoted in an older article.
- Calculates their own cost of sales and total expense ratios against the ATO bands, and their labour percentage against the industry guideline.
- Treats a gap as a question, not a verdict, and traces it to recipe costing, rostering, or overheads.
- Reads the numbers together, knowing no single benchmark decides whether a cafe is healthy.
The ATO benchmarks are a practical tool for pressure testing a cafe business plan before you commit to major costs. If your projected figures sit well outside the benchmark ranges, review menu pricing, recipe costs, staffing, and overheads before opening.