The Australian Taxation Office publishes small business benchmarks for cafes and restaurants, built from the tax returns of thousands of real businesses. They're grouped by turnover band, so a cafe turning over $200,000 is measured against similar cafes, not a large multi site operator.
Used well, they'll tell you whether your own numbers hold up before you commit to a lease, or whether a cafe already trading is leaking money somewhere.
What the ATO cafe benchmarks actually measure
The benchmarks are ratios against turnover, so you can compare your cafe with the industry whatever its 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 also publishes a labour benchmark for coffee shops, listed under its other benchmarks rather than as a key one. We cover it 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's coffee shops benchmarks page 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% | 73 to 86% |
| $250,000 to $600,000 | 35 to 41% | 81 to 90% |
| Over $600,000 | 33 to 38% | 86 to 93% |
Total expenses climb as a share of turnover in the higher bands, and that's normal. Larger cafes carry more staff and structure, so the margin is thinner but the volume is higher. A specialty coffee cafe and a brunch venue with a full kitchen will still sit at different points inside their band. What matters is knowing where you fall and why.
Where labour fits
Labour is one of the biggest costs a cafe carries. The ATO publishes it as a secondary benchmark for coffee shops, labour divided by annual turnover, from the same 2023 to 24 tax return data.
| Annual turnover | Labour to turnover |
| $65,000 to $600,000 | 21 to 32% |
| Over $600,000 | 27 to 35% |
The ATO ranges describe what typical cafes report, not what a well run cafe should aim for. HospoSure's target is 28 to 30% of turnover, including wages, superannuation and payroll costs. 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 target 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, while the numbers in your plan are still assumptions you can change cheaply.
They test your projections
If your cash flow model assumes a cost of sales of 25% and the benchmark for your band is closer to 38%, your projected profit is fiction. Check your numbers against the benchmarks early and you won't build a plan on optimistic figures.
They flag problems while they are still cheap to fix
If cost of sales drifts above the benchmark in your first quarter, review recipe costing or pricing now, not after a year of thin margins. A small correction early beats a menu rewrite later.
They strengthen a bank application
The benchmarks are public, so a lender can check your projections against them. A funding request with projected ratios inside the published ranges reads as grounded, and that's what a lender wants to see.
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
Four steps turn the benchmarks into a working check.
- 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. It may not be a mistake, but 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's a healthy cafe sitting inside a wide range for a good reason. Use the benchmark to spot the gaps you can't explain. Don't force every ratio to the middle.
Where the benchmarks fit alongside your other numbers
No single benchmark decides whether a cafe is financially healthy, so read cost of sales, labour and overheads together. The ATO ratios line up closely with the numbers experienced cafe operators track week to week.
| Cost of sales (food and beverage, ATO) | 33 to 42% by turnover band |
| Labour (incl. super and on costs, HospoSure target) | 28 to 30% |
| 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 and the cafe still isn't 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 40 common cafe overheads against projected turnover, and flags any cost ratio outside typical cafe ranges as you plan. When you approach a lender, set the bank ready report's projected numbers against the published bands for your turnover.
Try the free demoUsing 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's figures from the ATO site, not 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 ATO band and the 28 to 30% target.
- 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.
If your projected figures sit well outside the benchmark ranges, go back over menu pricing, recipe costs, staffing and overheads before you open.