What should restaurant rent be as a percentage of turnover in Australia?
Aim for 10% of sales. Treat 15% as the ceiling, and 8% to 12% as the healthy band. Rent is the one major cost you cannot fix with a better roster or a smarter menu. You fix it before you sign, or you live with it for the term.
| Line item | Target |
|---|---|
| Coffee cost of goods | 20% to 25% of coffee sales |
| Food cost of goods | 25% to 35% of food sales |
| Staff costs | 30% to 35% of sales |
| Rent | 10% of sales, 15% maximum |
| Utilities and overheads | 5% to 10% of sales |
| Net profit | 10% to 15% |
A venue paying 15% of sales in rent is handing over roughly one dollar in seven before it has bought a single thing to sell. That is survivable on high turnover and fatal on low.
What to check before you sign
- The rent review mechanism. Fixed percentage, CPI, or market. A fixed 4% a year compounds into a very different number by year five than it looks like on day one.
- Outgoings. What is included, what is not, and how your share is calculated. This is where surprise bills live.
- Make good. What condition you must return the premises in. This can be tens of thousands at the exact moment you have the least money.
- Permitted use. Narrow wording can stop you adding a service you will want later, like takeaway, delivery or liquor.
- Options. How many, how long, and what triggers them. No option means no leverage at renewal.
- The turnover you are assuming. Work out the rent as a percentage of the turnover you can actually defend, not the one in the projection.
If you are already in a lease that is too expensive
You have fewer options but not none. Ask for a review of your outgoings apportionment, because errors there are common. Look at whether you can lift turnover enough to bring the percentage back into band, since the ratio has two sides. And know your dates, because the only real leverage you will ever have is at renewal, and it disappears if you leave the conversation until the last month.
Why I read leases differently now
I signed my first lease in 2011 as a tenant who did not know what he was reading. Then from 2022 to 2025 I managed commercial property in Sydney, running lease negotiations and rent reviews from the other side of the table.
Tenant, business owner, and agent. Three seats, same document. Most operators only ever sit in one of them, and the lease is written by someone who has sat in all three.
Related guides
- Why is my cafe losing money?
- What is the average restaurant profit margin in Australia?
- Why is my restaurant busy but not profitable?
Sources. Reported industry figures are from the Restaurant & Catering Industry Association of Australia, 2025 Industry Benchmarking Report, published March 2026. Target ranges are from Zest Specialty Coffee Roasters, six key benchmarks every Australian cafe owner should know. Worked examples are arithmetic you can check yourself. Everything else is a first-person account of eleven years running one venue in Enmore, Sydney.
Venues measure cost of goods differently, so treat every published average as a signal to check your own numbers against, not a rule.
I ran Great Aunty Three in Enmore for eleven years. I know which of these numbers eat an owner alive, because they ate me.
If the room is full and the money is not, the leaks are the problem. That is what the Full Plate Method does, one client at a time, by application. If the venue runs fine and the room is the problem, that is Forkcast, my marketing studio for Sydney restaurants and cafes.