We think a cafe should work out its wage cost every week, all in, and keep a second figure with the owner’s own hours costed in. Both read higher than wages alone.
All in means everything it costs to have people on the roster: gross wages plus super, workers compensation, and payroll tax if you pay it. Divide that by sales without GST.
On a $20,000 week, all in, it’s 31.9%
Take a cafe doing $22,000 a week, all of it taxable, so $20,000 without GST.
- Gross wages for ordinary hours, including casual loading and penalty rates: $5,600
- Super at 12%: $672
- Workers compensation, the yearly premium spread across the weeks: $110
- All-in labour cost: $6,382
- Wage cost: $6,382 ÷ $20,000 = 31.9%
Every point of wage cost on this cafe is $200 a week, or $10,400 a year.
Super is 12% of each employee’s qualifying earnings, and since 1 July it has to reach the fund within 7 business days after payday. That makes it part of what every pay run costs. The timing is in our payday super piece.
As an employer you must hold workers compensation insurance from an authorised insurer, and the rules vary by state. Payroll tax is a state or territory tax that starts once your total Australian wages pass your state’s threshold. If you pay it, it goes in.
Leave belongs in there too. A permanent barista on annual leave still gets paid while a casual covers the shift, so that week carries two wages for one spot on the roster.
The same week can read 28.0% or 40.9%
Same cafe, same week, counted four ways:
- Wages only: $5,600 ÷ $20,000 = 28.0%
- All in, with the GST left in sales: $6,382 ÷ $22,000 = 29.0%
- All in, sales without GST: $6,382 ÷ $20,000 = 31.9%
- All in, plus 45 owner hours that would cost $1,800 to cover: $8,182 ÷ $20,000 = 40.9%
Track the third line every week. Look at the fourth before you step back from the floor or sell, because someone will need paying for those 45 hours.
The ATO benchmark counts wages and leaves out the owner
The ATO publishes labour to turnover ranges for coffee shops, built from 2023-24 tax returns. Coffee carts and vans aren’t included.
- Turnover $65,000 to $250,000: 21% to 32%
- Turnover $250,001 to $600,000: 21% to 32%
- Turnover more than $600,000: 27% to 35%
A cafe doing $20,000 a week turns over about $1 million a year, so its range is 27% to 35%. If you mostly sell to go, the ATO’s takeaway food services ranges run lower: 16% to 26% for $65,000 to $200,000, 15% to 24% for $200,001 to $600,000, and 19% to 27% above that.
The ATO counts less than the all-in figure. It defines labour as salary and wage payments, contractors included, and says to leave out amounts paid to associated parties such as a business owner or partner. Its labour sum adds salary and wages to contractor payments and divides by turnover excluding GST. Workers compensation and payroll tax aren’t in it.
That’s why your all-in figure can sit above the ATO range for the same cafe. Use the range as a rough check, and run the business on the all-in number.
Weekends and the quiet ends of the day push it up
A cafe that takes a third of its sales on the weekend can run a higher percentage on those days even with a tight roster. Penalty rates, the higher rates for weekends, public holidays, overtime, late nights and early mornings, depend on your award, and the current rates are in the Fair Work pay guides.
Long opening hours add cost at the quiet ends of the day. Staff have to be paid for all hours they work, opening, closing, staff meetings and training included.
To find the slow days, divide each day’s sales by the hours worked. In our weekly P&L example, a $4,800 Saturday on 60 hours is $80 an hour, and a $1,500 Tuesday on 30 hours is $50. The Tuesday still needs a cook and a barista to open the doors. If you’re weighing casuals against part-timers for those shifts, cost both on your own roster first. We’ve done that sum for venues deciding how to roster.
Check it every Monday for the week before
If you only look at labour at BAS time, you’re looking at about 13 weeks of rosters you can no longer change. On a Monday, next week’s roster is still a draft.
Match the periods. A fortnightly pay run set against one week of sales doubles that week’s labour and leaves the next one empty, so split each pay run across the weeks it covers.
Check that every pay run is in the books. We have taken over a file with a pay run missing entirely, which makes labour for that period look cheaper than it was.
One week over target can be a wet Saturday or someone on leave. Three weeks in a row usually means the roster no longer matches the trade.
What we would do
- Work out wage cost every Monday, with super and workers compensation in, over sales without GST
- Split fortnightly pay runs across the two weeks they cover
- Use the ATO range for your turnover as a rough check
- Keep a second figure with your own hours costed in
- If you’re over target three weeks running, change next week’s roster
If we run your payroll, super goes out with every pay run and labour is on your weekly P&L every week.