Why is my cafe losing money?
Six numbers will tell you, and you can check all of them this afternoon. Coffee cost of goods, food cost of goods, staff, rent, overheads and net profit. If your cafe is losing money, at least one of those six is well outside its target, and it is almost never the coffee.
| 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% |
The three that sink cafes
1. Average spend is too low for the hours you are open
A cafe lives on small transactions. If your average sale is $9 and you are open twelve hours with three staff, the arithmetic does not care how good the beans are. Look at what a food attachment does to that number. One toastie added to one in three coffees changes the week.
2. Rent is out of proportion
The target is 10% of sales, with 15% treated as the ceiling. If you signed a lease based on the turnover you hoped for rather than the turnover you have, that gap does not close by itself. It is also the one cost you cannot fix with better rostering.
3. You are rostered for the peak all day
Cafes have a violent morning and a long quiet middle. If your roster is flat across the day, you are paying peak staffing to serve an empty room from 11 to 3. Staff costs should land at 30% to 35% of sales. Flat rostering is the fastest way past it.
Check these four things today
- Average transaction value, by hour, for the last four weeks.
- Rent as a percentage of sales. Compare it to 10%, and worry above 15%.
- Staff costs as a percentage of sales, with your own hours costed in at a real wage.
- Cost of goods split between coffee and food, because they have different targets and hide each other.
Whichever is furthest outside its target is where your money is going. It is almost never the thing you have been worrying about.
The one nobody says out loud
If you are working fifty hours in the cafe and not paying yourself for them, your staff cost percentage looks healthy and your business is lying to you. Put a real wage for your hours into the number before you make any decisions off it.
I ran a venue for eleven years with myself as the free labour that made the numbers work. Team paid, suppliers paid, rent paid, me last. It looked like a functioning business right up until it did not.
Related guides
- What should rent be as a percentage of turnover?
- What percentage of sales should wages be?
- Should I raise my menu prices?
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.