Cafe net profit margins

psaigh

[quote]plus 9% super if you're paying it and 10% gst, again, if you're paying it

sketchy

Hi As a cafe owner if i hit 5-8% net profit then i'm pretty happy. any higher and tax man gets too much. LE

tea

Thanks for the reply guys... psaigh - I am assuming the 24% profit margins might even decrease year after year, as suppliers increase their prices yet the price of a cup of coffee is still pretty low due to oversupply of cafes. sketchy - 5-8% sounds more realistic with most cafe owners and other small business owners 😉

askthecoffeeguy

the other thing to take into account is on season and off season - during peak trading a margin 0f 20 per cent profit is not out of the question, but during quieter times you are sometimes lucky to just break even. and I agree with the comments about the tax man - they always take their share and the more you make the more they take! thin thing is to do your costings for all possible scenarios and then to adjust your payrol accordingly hope this helps, cheers, pat

tea

Yes thanks Pat, I've drawed up the worse, medium and best case scenarios. The tax man can only take what you tell him... :0 When's peak / off peak seasons though?

askthecoffeeguy

that will vary according to location but for many businesses the winter period represents a marked downturn in trade due to significanly reduced foot-traffic, also, unless you are centrally located, the post christmas period: jan / feb - can be very quiet for many places, especially if you are dependant upon tourism or students for your patronage, as a lot of folks holiday at this time there is no real definitive peak period, you will probably have to trade over a 12 month period to determine that for yourself good luck with your new venture cheers, pat

sketchy

Hi Again I thought when you said net profit you meant end of year after everthing including drawings and salaries. thats how i worked on the percentage that i did. of course during winter, profit margins increase due to a higher number of coffees being sold. LE

[deleted]

We are quite busy in Winter because the locals like to warm themselves up with coffee. I think it's a very location-dependent thing, the whole weather-business relationship. Also, I think that in Summer we would really get just as many people coming in (albeit for iced coffees/milkshakes and not so much caps and lattes), if not for the fact that people choose to travel/go to the beach in the hotter months. The answer is clearly a cafe near the beach C:

tea

your right sketchy, I did mean end of year net profit but still good to know the peak and off peak seasons as it will effect cashflow. Do you think your net profit margins will decrease? Due to the increase in competition, prices have stayed low but I'm sure suppliers prices would have increase, as well as rents, wages. Do you increase your prices accordingly?

sketchy

Hi tea Unfortunately you do have to increase prices. in the last 12 months i have seen some things such as milk and fresh fruit and veg increase greatly. Milk went up by about 26cents a litre. add to that the fact that i have to travel 150 km each way to perth to get fresh and dry goods. so margins have goten tighter, but you can cut costs by doing more hours yourself, triming off less profitable items and shoping around for better prices. LE

tea

And on top of that, GST is chargable on milk, bread, fruit & veg to cafe owners but cannot be claimed. Must be a pain to travel 300km.. You must really stock up each time.. Will interest rate rises affect your sales? I'm assuming people who are on a budget will cut that cup of coffee out to save money but then again if they really love (or addicted to)their coffee they might not.

[deleted]

What sort of margins would you expect on biscuits/cakes bought in?