Overheads run about 25% of turnover for an Australian restaurant taking A$500,000 to A$2 million, which is roughly A$255,000 a year on A$1 million of sales, and rent is less than half of it.
Skai Solutions gets that by subtracting the ATO's own published cost of sales and labour bands from its total expenses band, because the ATO publishes all three separately and never puts them together. The subtraction is the useful part, and it turns up something the usual advice has backwards: the overhead line grows as a share of turnover as a venue gets bigger.
A grease trap is the other trade waste cost that arrives on the same bill, and it is priced separately: see what grease trap cleaning costs a restaurant for the per litre rates, the pump out schedule the utility sets, and the charge that applies when a trap is not maintained.
Everything that is not stock and not wages. Rent and outgoings, electricity and gas, water and trade waste, insurance, council registration and licences, accounting and bookkeeping, repairs and maintenance, cleaning contracts, pest control, software subscriptions, card processing fees, delivery marketplace commissions, marketing, and depreciation on the fit out.
A canopy and duct system is the overhead nobody budgets until the first invoice arrives. Commercial kitchen exhaust cleaning costs A$230 to A$900 a visit in Sydney, and the number of visits is set by what is cooking rather than by the size of the room.
Restaurant accounting calls stock and wages together the prime cost. Overhead is the rest. That is the whole definition, and it matters because the two halves behave differently: prime cost moves when you are busy, and overhead mostly does not.
The ATO publishes small business benchmarks built from lodged 2023-24 tax returns. Its restaurants benchmark and coffee shops benchmark give total expenses, cost of sales, labour and rent as separate lines. They never subtract one from the others. The subtraction below is ours.
| Business and turnover band | ATO avg total expenses | ATO avg cost of sales | ATO labour range | Derived overhead band |
|---|---|---|---|---|
| Restaurant, A$65,000 to A$500,000 | 84% | 35% | 18% to 30% | 19% to 31% |
| Restaurant, A$500,001 to A$2,000,000 | 88% | 35% | 23% to 32% | 21% to 30% |
| Restaurant, over A$2,000,000 | 91% | 34% | 27% to 34% | 23% to 30% |
| Coffee shop, A$65,000 to A$250,000 | 79% | 38% | 21% to 32% | 9% to 20% |
| Coffee shop, A$250,001 to A$600,000 | 86% | 38% | 21% to 32% | 16% to 27% |
| Coffee shop, over A$600,000 | 89% | 36% | 27% to 35% | 18% to 26% |
Derived overhead band is Skai Solutions' arithmetic: ATO average total expenses minus ATO average cost of sales minus each end of the ATO labour range. It is not an ATO figure and the ATO does not publish an overhead benchmark. Data year 2023-24 lodged returns, ATO page last updated 16 March 2026. Because two of the three inputs are ranges, the answer carries the width of the labour range. Treat the centre, not the edges, as the useful number.
For the middle band, the one most independent venues sit in, that is an overhead line centred near 25.5% of turnover. On A$1 million of sales it is about A$255,000 a year, or A$4,904 a week, before a single plate leaves the pass.
Rent gets all the attention and it is not the problem. Put the ATO rent range beside the derived overhead band and the residual, everything that is neither stock, nor wages, nor rent, is the line that actually grows.
| Business and turnover band | Derived overhead, centred | ATO rent range | Residual: everything except rent |
|---|---|---|---|
| Restaurant, A$65,000 to A$500,000 | 25% | 11% to 17% | about 11% |
| Restaurant, A$500,001 to A$2,000,000 | 25.5% | 8% to 12% | about 15.5% |
| Restaurant, over A$2,000,000 | 26.5% | 6% to 9% | about 19% |
| Coffee shop, A$65,000 to A$250,000 | 14.5% | 10% to 17% | about 1% |
| Coffee shop, A$250,001 to A$600,000 | 21.5% | 8% to 14% | about 10.5% |
| Coffee shop, over A$600,000 | 22% | 6% to 10% | about 14% |
Residual is Skai Solutions' arithmetic: the centre of the derived overhead band minus the midpoint of the ATO rent range for the same row. Rounded. Same sources and same caveats as the table above.
Two things fall out of that, and neither is what the usual advice says.
First, the non-rent overhead of a small cafe is close to nothing. At the A$65,000 to A$250,000 coffee shop band it lands near 1% of turnover once rent is taken out. That is not a well run business. It is a business where the reported expense line has almost no room in it for insurance, repairs, software or marketing, because an owner is doing the work that would otherwise be bought. Read it as a warning about what happens when the owner stops, not as a target.
Second, the residual rises as the venue grows, from about 11% to about 19% of turnover for restaurants. Rent falls as a share, exactly as you would expect from spreading a lease over more sales, and everything else more than replaces it. Scale does not dilute overhead in Australian hospitality. It buys you compliance, systems, management, marketing and maintenance that a small venue simply does without.
Most of the line is fixed, which is the reason a quiet fortnight is more expensive than a busy fortnight is profitable.
| Behaviour | Costs | What it means in practice |
|---|---|---|
| Fixed | Rent and outgoings, insurance, council registration, licences, accounting, most software subscriptions, loan interest, depreciation | Runs whether you open or not. Only changes at renewal or renegotiation. |
| Moves with covers and hours | Electricity, gas, water and trade waste, waste collection, cleaning, laundry, repairs | Tracks how long the kitchen is hot and how many people came through, not how much they spent. |
| Moves with dollars | Card processing fees, delivery marketplace commissions, some royalty and marketing levies | A percentage of the sale. Grows exactly in step with revenue and never gets cheaper because you are busy. |
The middle row is the one operators underestimate. A Sydney restaurant pays for water, wastewater and a trade waste charge that exists only because it cooks, and the combined rate is far above the headline water price. The bottom row is the one that quietly scales: a venue doing A$1 million through delivery marketplaces at a 30% commission on even a fifth of sales is paying A$60,000 a year in one line.
Four numbers off your own profit and loss, for a full twelve months rather than a month:
Overhead equals total expenses minus cost of goods sold minus total labour. Divide by sales. If your answer is far below the band, check whether the owner's labour is inside total expenses, because for a sole trader or partnership it usually is not, and that single difference moves the number more than any cost saving will. The same caution applies to the implied margin at the bottom of the page.
Then compare the pieces rather than the total. Your cost of sales, labour percentage and rent percentage each have their own published band, and a total that looks normal can hide one line that is badly out.
The ATO is explicit that sitting outside a benchmark range does not mean a business is wrong, only that there may be room to look. So look in this order, because it is the order of how much money is usually sitting there.
What is not on that list is cutting insurance, compliance or maintenance. Those are the three that cost several times their saving the first time something goes wrong.
No, and it is worth saying plainly rather than borrowing an Australian number. As at September 2026 there is no published New Zealand equivalent of the ATO small business benchmarks for restaurants or cafes. The closest figure in circulation is the Restaurant Association of New Zealand's 2025 Hospitality Report, which puts wage costs at about 40% of hospitality revenue. That is an industry survey across hospitality rather than a benchmark built from restaurant tax returns, so it cannot be subtracted from anything. A New Zealand operator can use the Australian shape, that overhead is roughly a quarter of turnover and rent is under half of it, as a sense check. Not as a target.
Almost none of them, with one exception. Workers compensation is set by a published rate per industry, so a NSW cafe or restaurant pays 2.250% of its total wages and can work the figure out to the dollar before anyone quotes it. Every other overhead line, rent, power, insurance cover beyond workers compensation, has to be priced individually. We have set the published rates out on restaurant insurance cost in Australia.
Honest answer first: an answered phone does not move the 25%. Rent, insurance, utilities and licences are the same whether the phone rings out or not, so nobody should buy a phone agent as a cost reduction. It belongs in the residual, beside the booking software and the card terminal, and it is a small line inside a large one.
Where it does show up is on the other side. Overhead is fixed, which means every cover you do not take is a cover that contributed nothing to a cost you paid anyway. At A$255,000 of annual overhead on a A$1 million venue, that is about A$699 a day, every day of the year, arriving whether the room is full or empty. That is the argument for protecting the bookings you already have rather than trimming a line that will not move.
Skai Solutions builds an AI receptionist that answers the phone during service, takes bookings and orders, and keeps working after close. Setup takes five days. If your phone mostly carries supplier calls and enquiries rather than bookings, a basic message-taking plan is the right buy and it is not us: the cheapest way to answer a restaurant phone prices the options honestly, including the free ones.
Electricity is the overhead line with a published reference price behind it, which makes it the easiest one to check yourself. The regulated small business rates for 2026-27 and how to turn them into your own annual figure are on how much electricity costs a restaurant.
One of them is more negotiable than it looks. Two of the four inputs to a trade waste charge, your discharge factor and your category, are set once at assessment and then inherited for years, sometimes from a previous tenant's menu.
Cleaning, and it is the only line on the list where you can check the supplier's own cost floor before you negotiate, because the cleaning award rate is published. The hourly bands and the arithmetic are on restaurant cleaning cost in Australia.
No. A fit out is capital, and it turns into an overhead afterwards through depreciation, finance repayments and the cleaning and servicing obligations the build creates. If you are still costing the build itself, the current per square metre bands are set out in cafe fit out cost in Australia.
Footpath seating is licensed separately again, and the fee depends on which council owns the pavement outside your door. We priced it in what an outdoor dining permit costs, where a 24 seat footpath at one Melbourne council works out near A$3,430 a year.
Fire compliance is one of the fixed lines that does not move with trade. What fire extinguisher servicing costs an Australian venue has the per unit and per visit rates, and the record keeping rule that carries a A$33,000 penalty behind a A$300 invoice.
Beverage sits above the overhead line rather than in it, in cost of sales. For that half of the number see beverage cost percentage for a restaurant.
Licensing sits in the overhead list as an annual line, and it is the one nobody can quote for you: every state calculates it per venue. See liquor licence cost in Australia for the application fees that are published and an honest note on the annual fees that are not.
Overheads are the fixed block in the break-even sum, and on ABS 2024-25 figures the non-prime-cost remainder is 28.6% of sales. Our page on restaurant break even point shows what that block means in covers a day once you divide it by a contribution margin.
Overheads are every cost that is not stock and not wages. Rent, utilities, insurance, waste collection, licences, accounting, repairs, subscriptions, card fees, delivery commissions, marketing and depreciation. In restaurant accounting stock and wages are called prime cost, so overhead is simply what is left of the expense line once prime cost is taken out.
On the ATO's published small business benchmarks for 2023-24, an Australian restaurant turning over A$500,001 to A$2 million reported average total expenses of 88% of turnover, average cost of sales of 35% and labour of 23% to 32%. Subtracting leaves an overhead band of about 21% to 30%, centred near 25.5%. That subtraction is Skai Solutions' arithmetic on the ATO's published figures, not an ATO figure. The ATO does not publish an overhead line.
Not in most venues. The ATO puts rent at 8% to 12% of turnover for a restaurant in the A$500,001 to A$2 million band, against a derived overhead band centred near 25.5%. So rent is worth roughly 10 points and everything else is worth roughly 15. In a venue over A$2 million the gap is wider still, because rent falls to 6% to 9% while total expenses rise.
A fixed cost does not move when you sell one more meal: rent, insurance, licences, accounting, most subscriptions. A variable cost moves with sales: stock, card processing fees, delivery marketplace commissions. Utilities and waste sit in the middle, because they move with covers and opening hours rather than with dollars. Most of the overhead line is fixed, which is why a quiet week hurts more than a busy week helps.
There is no published New Zealand equivalent of the ATO small business benchmarks, so no honest New Zealand overhead percentage exists to quote as at September 2026. The Restaurant Association of New Zealand's 2025 Hospitality Report puts wage costs at about 40% of hospitality revenue, but that is an industry survey figure across hospitality and it is not comparable with a benchmark built from restaurant tax returns. Use it for direction, not for arithmetic.
Start by splitting the line in two. Rent is worth a conversation once, at renewal, and nothing in between. The other 15 points are twenty small lines that nobody reads, and the usual finding is three or four subscriptions and service contracts that outlived their reason. List every direct debit for the last three months against what it is for. That exercise is free and it is the only one that reliably finds money.