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Coffee Business

MANAGING CAFE LABOUR COST

In your cafe/coffee business, you want good people working with you and you want to pay them properly, but the cost of wages can kill those good times real quick – for you, anyway.

So what should you aim for?

The short answer is that labour should cost 30% of sales. The slightly longer answer is that it can vary anywhere between 25-35% depending on how many hours the owners work on shift, how many items are made from scratch (vs bought in) and how long the business has been trading.

When I say labour cost, I also mean everything that is attached to paying staff: Wages, superannuation, worker’s comp insurance. Try to get these lines grouped together on your monthly Profit & Loss report to make this easier to track (click here for more on that).

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5 SIMPLE CAFE MARKETING IDEAS

Is marketing meant to be an expensive, complicated, mystical art form? Of course not. Small businesses are at their best when they keep it real & make genuine connections.

For most coffee businesses, the foundation of sales is regular customers. If you don’t have customers coming back regularly, then the numbers simply don’t work.

Who are these regulars? People who live or work in the area.

What do they need? Consistently tasty coffee & fast service.

Ok, got those locked down…good, let’s get onto phase 2:

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THE BUSINESS OF MAKING COFFEE

It can be easy to feel like you’re making money in a cafe. Cash is in the till, the place is busy, you’re paying bills – and then someone (probably your accountant) tells you that you’re not actually make any profit.

It’s a common story, according to the Australian Taxation Office, the average operating profit in Australian coffee shops is around 10% of sales. So for a cafe doing sales of $10k / week that works out to $50k / year profit to pay yourself, interest on the business loan, tax & one day start to pay off debt…

This is obviously not ideal…so what should it be?

20%

I think that’s what we should be aiming for, unless the business is just a hobby, you need to actually see some money at the end of this.

But how?

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WRITING A CAFE BUSINESS PLAN YOU MIGHT ACTUALLY USE

by Ben Irvine

A business plan is one of those documents that people are often forced to write. maybe by the bank, or their landlord, or even just out of a sense of duty. So they fill in a generic template with a whole lot of businessy jargon to send with their loan application / lease application / other paperwork in order to tick a box. The people intended to read it glance over the financials and it goes to rest in a filing cabinet forever more.

It’s a shame, because it is a great way to plan out the details of your new business.

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