Key takeaways: how to make a café profitable
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A high-volume service café does not automatically translate to a healthy margin
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Tracking revenue and costs in your venue by category, not just in total, is the foundation of financial control
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Small, consistent improvements across COGS and labour compound into significant annual gains for your coffee shop
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Technology doesn't replace great hospitality; it protects the margin that makes great hospitality sustainable
You know the feeling – the machine hasn't stopped, your team is running flat out, and the queue hasn't dropped below five people all morning. And yet when you look at your bank account at the end of the month, you're left wondering where it all went.
Here's the uncomfortable truth most café owners eventually arrive at: revenue is not the same as profit. A packed café and a profitable café are two completely different things, and the gap between them usually comes down to three numbers that most operators either don't track or don't know how to use.
At ONA Coffee, our approach to café profitability is built on this principle: not hustle, not volume, but understanding the numbers.
The numbers that make (or break) profitability
#1. You don't know your actual sales mix, or what each category is really costing you
When was the last time you looked at the breakdown of where your revenue actually comes from? Not just the total, the split across every category your café operates?
This is your ‘sales mix’, and it matters more than your total revenue figure because not all revenue is equal.
At ONA, we break our venues down into at least five distinct categories:
1. Bar, espresso, milk-based drinks, other beverages
2. Food, kitchen-prepared items: breakfast, lunch, mains
3. Cakes & display food, cabinet items, grab-and-go, whether prepared in-house or sourced from suppliers
4. Retail coffee, whole bean bags, single origins, seasonal releases
5. Merchandise, branded goods, brewing equipment, accessories
Why does this level of detail matter? Because each category carries a completely different margin profile, a different labour requirement, and a different implication for your business. Treating them as one number is like coaching a team without knowing individual player stats.
Here's what ONA benchmarks show across our venues:
Category and Revenue Target
Bar 40-50%
Food 35-40%
Cakes & display food ~10%
Retail coffee & merchandise 10-25%
Food is the hardest category to make money from, as it is labour-intensive, perishable, and unforgiving on margin. The opportunity for most cafes isn't about cutting food - it's about growing the categories that carry stronger returns.
At ONA, we’re always looking at what are our most profitable café items. Increasing your bar revenue by even 5%, without adding a single extra customer, can move your bottom line more than a significant jump in total weekly turnover.
The fix? Pull your Point of Sales (POS) data today. Break your revenue into these categories. Then ask yourself honestly: where are you leaving margin on the table?
#2. Your COGS is drifting, and the margin is leaking quietly
Cost of Goods Sold (COGS) is the percentage of revenue you spend on the ingredients or products required to produce each item – and it drifts, constantly. The problem is that most operators only see it drifting when they look at the bottom line of a monthly Profit and Loss (P&L), by which point, the damage is already done.
The solution is the same as with your sales mix: track by category.
Think of it like a scoreboard. Running a business without accurate, category-level COGS data is like playing a game without knowing the stats – not just the final score, but who scored, how many assists were made, how many chances were missed.
You need that level of detail to know where to direct your training and improvement efforts. The same principle applies here.
ONA's benchmarks by category:
Category and Target COGS
Bar, coffee & drinks 22-25%
Food 25-28%
Cakes & pastries 35-45%
Retail 55-60%
(Note: Retail COGS appears high but requires zero labour to produce, it is pure add-on revenue that lifts your blended margin.)
One of the most common and costly places we see margin leaking is in the kitchen, and it often comes down to two things: food waste and menu pricing.
- On waste: portion control that isn't standardised will erode your food COGS quietly and consistently.
- On pricing: every item that goes on your menu should be costed before it goes on. Know your plate cost. Know your margin. If the numbers don't work before it's printed, they won't work once it's selling.Don’t just look at your café profit and loss statement; track your COGS weekly. Build the habit of reviewing it by category, not just in aggregate. That's where the insight lives.
#3. You're reading your P&L wrong, or not reading it at all
The café profit and loss statement (P&L) tells the full story of your venue. But most operators either don't look at it regularly, or they look at the bottom line without understanding the three zones that make it up.
Zone 1, Gross Profit (top)
Revenue minus COGS. Target: 65-75% gross margin. This is your foundation. If you're sitting below this, address your COGS before anything else; everything downstream is harder to fix if Zone 1 is broken.
Zone 2, Labour & Operating Costs (middle)
Wages, including superannuation and payroll tax, are your biggest controllable cost, and the target is 34-38% of revenue. The keyword is *controllable*. This isn't about cutting people; it's about putting the right people in the right place at the right time.
For example, at ONA Coffee Melbourne, the introduction of QR code ordering across dine-in tables allowed for one less person to have to work on the cafe floor each day, without any reduction in service quality. The annual saving: $30,000-$40,000. The investment: a software subscription.
Zone 3, Overheads & Fixed Costs (bottom)
Rent, power, packaging, software. Rent should ideally sit at 6-10% of revenue, as anything above 10% starts to create real pressure on the business, and we strongly recommend negotiating lease terms as a percentage of projected revenue before you sign.
There are also a number of other overhead costs that are part of your COGS. Review your suppliers annually, review your software stack, and any subscriptions and other services that regularly charge you. These costs are often treated as fixed and forgotten, they rarely are.
A well-run ONA venue targets net profit of 13-20%. For an established business operating with strong systems, the upper end of that range,15-20%, is the benchmark to work toward. Most cafes lose money in Zone 2 and Zone 3 because they never got Zone 1 right. Fix your gross margin first. Then you have the headroom to manage everything below it.
The insight most operators miss
Profitability isn't accidental. It's engineered.
The cafes we see thriving aren't necessarily the ones with the longest queues or the most Instagram followers, though those things certainly help. They're the ones where the operator knows their numbers inside and out.
They know their bar COGS to the percentage point, their wage cost by day of the week, which items on their menu are earning their place, and which ones are quietly costing them.
None of this is complicated. It does, however, require the right systems, the right data, and the discipline to look at the numbers regularly. That's it.
At ONA, our wholesale partnership is built on exactly this. Great coffee is the foundation, but the cafes we're most proud to work with are the ones that are genuinely thriving as businesses. Not just serving exceptional product, but building something sustainable for their team, their customers, and themselves.
Your next steps
Step 1: Build your scoreboards
Pull your POS data and start measuring revenue and COGS by category. Set up a weekly review. What gets measured gets managed, and what gets managed gets better.
Step 2: Identify your biggest opportunity and act on it
Once your numbers are in front of you, you'll see quickly where the margin is leaking. Prioritise one area, make a change, measure the result. If it works, keep it. If it doesn't, move on and try something else. Improvement in this business is iterative, not a single fix.
Step 3: Get in touch with the ONA team
We'd love to support you. Every ONA wholesale partner has access to one-on-one business review sessions, P&L walkthroughs against our benchmarks, and our COGS and plate cost calculator, a practical tool to help you price your food and drink menu with your actual margins front and centre.
Reach out to the ONA wholesale team to get started.
wholesale@onacoffee.com.au
https://onacoffee.com.au/wholesale
**ONA Coffee is an Australian specialty coffee roaster with venues in Canberra, Sydney, and Melbourne. We work with wholesale partners across Australia to build more profitable, sustainable, and enjoyable businesses.