The average profit for a small cafe is about 2.5 percent. Most expenditures go toward overhead. Building sales volume makes a small cafe more profitable.
Coffee shops are profitable due to high profit margins and low cost of stock. Effective management of costs ensures success.
The money a cafe owner earns involves understanding the type of cafe you will start. Income may vary from one cafe to another despite the same concept and products.
The key is to increase sales and gross receipts. Some expenses will remain fixed. A small to medium-sized coffee shop can earn $60,000 to $160,000 for the owner.
Average net profit for a cafe in Australia is 10 percent of sales. For a cafe with $500k annual sales, that leaves $50k profit after loans, taxes and personal income.
Start-Up Costs
It takes $200,000 to $375,000 to set up a sit-down coffee shop. Starting costs vary based on location, size and equipment.
Increasing Foot Traffic
- List online
- Partner with tourism
- Use social media
- Become a community meeting place
Location and Operations
Location is key. Staff issues and using personal savings can make owning a cafe difficult. Research the coffee business before opening a cafe.
Coffee shops have 85 percent gross margins. Despite financial hurdles, opening a coffee shop allows doing enjoyable work and creating a community focal point.