Skai Solutions worked it from the ATO's own benchmarks: an Australian restaurant turning over A$500,000 to A$2 million reports average total expenses of 88% of turnover, which implies a pre-tax margin near 12% before the owner is paid.
The Australian Taxation Office publishes small business benchmarks built from lodged tax returns, currently the 2023-24 year, with the page last updated 16 March 2026. They are the strongest cost benchmark available for Australian hospitality and almost nobody in this industry uses them, which is odd, because they are drawn from what tens of thousands of venues actually reported rather than from a survey of people who answered a survey.
For what the cards themselves cost, the restaurant merchant fees benchmark has the Reserve Bank rates for the June quarter 2026, including the overseas-issued card that costs more than three times a domestic one.
The ATO publishes total expenses as a share of turnover. It does not publish a profit margin. Subtracting one from the other gives an implied pre-tax margin, and Skai Solutions has done that below. Read it as our arithmetic on the ATO's averages, not as an ATO number.
| Business and turnover band | ATO average total expenses | Implied pre-tax margin |
|---|---|---|
| Restaurant, A$65,000 to A$500,000 | 84% | 16% |
| Restaurant, A$500,001 to A$2 million | 88% | 12% |
| Restaurant, over A$2 million | 91% | 9% |
| Coffee shop, A$65,000 to A$250,000 | 79% | 21% |
| Coffee shop, A$250,001 to A$600,000 | 86% | 14% |
| Coffee shop, over A$600,000 | 89% | 11% |
Full source tables: ATO restaurants benchmark and ATO coffee shops benchmark. The coffee shop set excludes carts, vans and mobile coffee retailers.
On the same ATO arithmetic, an Australian cafe turning over A$65,000 to A$250,000 reports average total expenses of 79% of turnover, which implies a pre-tax margin near 21% before the owner is paid, falling to 14% between A$250,001 and A$600,000 and 11% above A$600,000. The ATO calls this category coffee shops and it excludes carts, vans and mobile coffee retailers.
The number most cafe owners have in their head comes from American content, where published coffee shop margins cluster in the low single digits. Those are net margins after an owner's wage and often after franchise fees, and they are not what the ATO table measures. Compare like with like or you will conclude your cafe is failing when it is sitting mid band.
The finding worth carrying out of this table is that a cafe's implied margin roughly halves as it grows: 21%, then 14%, then 11%. Growth is normally sold to operators as the fix for a thin margin. In the benchmark data it is the opposite. A cafe that doubles turnover from A$200,000 to A$450,000 moves from an implied 21% to an implied 14%, so A$42,000 of implied margin becomes A$63,000, which is more money and a worse business per dollar of work.
A cafe worked example, every input shown. Take A$450,000 of turnover, the middle band. Average total expenses of 86% is A$387,000, leaving A$63,000. If you are a sole trader and you have not paid yourself, that A$63,000 is your income for a year of full-time work, before tax and before any super. If you run a company and pay yourself A$70,000, the same cafe posts a loss of A$7,000 on identical trading. Nothing changed except where the owner's labour sits on the P&L, which is why two cafes with the same takings can honestly describe themselves as profitable and unprofitable.
Cost of sales runs 32% to 39% of turnover for a small restaurant and 34% to 42% for a small coffee shop, and that gap holds in every band: the ATO averages are 35%, 35% and 34% for restaurants against 38%, 38% and 36% for coffee shops. So the cafe buys its stock about three points worse, which is three points of turnover, A$13,500 a year on A$450,000. The cafe is ahead anyway at the small end because its total expenses are five points lower: it trades a shorter day, needs a thinner roster and does not carry an evening kitchen brigade. That is the whole story of the margin gap at the small end.
Then it inverts. Above A$600,000 a coffee shop is running 89% total expenses against 88% for a restaurant in a comparable band, because a cafe that has grown to that turnover has bought a full kitchen and a full roster without gaining the average spend per head that lets a restaurant carry them. Growing a cafe into a restaurant cost base without the restaurant menu price is one of the more common ways to get busier and poorer.
One caveat the ATO makes itself and vendor content routinely drops: sitting outside a band does not mean you are wrong. It means there may be room to improve, and it means the ATO may want to understand why. Never treat a band as a target the ATO has set.
Two numbers, one subtraction, and the discipline to use the same twelve months for both. The same benchmarks also give you your restaurant overhead costs as a share of turnover, which is where a normal-looking margin usually goes wrong.
Then be honest about the owner. If you are a sole trader and you have not paid yourself a wage, your margin is not comparable to a company that has. Add a realistic market wage for the hours you personally work, recalculate, and compare that number instead. Plenty of venues that look like they run at 15% run at 2% once the owner is paid, and that is the number that tells you whether the business works.
Do not attack the total. Attack whichever of the three big lines is furthest outside its band, because that is where the recoverable money is.
Cost of sales out of band. The ATO's averages are 35% for restaurants and 36% to 38% for coffee shops. If yours is 45%, the cause is almost never theft and almost always a menu priced against invoices that have since moved. Our page on restaurant food cost percentage works through the formula and the five usual causes.
Labour out of band. The ATO's bands are 18% to 30% at the small end and 27% to 34% at the large end. Wage rates are not a lever you control: the Fair Work Commission raised modern award minimum wages 4.75% from 1 July 2026. Rostering is. Restaurant labour cost percentage covers how to read it, and hospitality award rates covers what you are actually obliged to pay.
Rent out of band. 11% to 17% for a small restaurant, 6% to 9% for a large one. This is the least flexible line and the one that most often decides whether a venue survives a bad year. If rent is 20% of turnover, no amount of portion control fixes it.
Context for why this is worth doing now rather than in the new year: CreditorWatch measured a 10.4% closure rate across Australian food and beverage services in the twelve months to January 2026, the highest of any industry and roughly double the economy-wide average, up from 9.6% ten months earlier.
There is no Stats NZ or IRD equivalent of the ATO small business benchmarks, so any page applying these percentages to a New Zealand venue is guessing. The two figures that do exist and are worth holding: the Restaurant Association of New Zealand puts wage costs at about 40% of hospitality revenue on total industry sales of NZ$15.99 billion for the year to June 2025, and Stats NZ counts 9,858 cafes and restaurants and 7,422 takeaway food services in the country as at February 2025. Our hospitality wages in New Zealand page works the wage side of that properly.
At a cafe rather than a restaurant the same margin arithmetic produces a much smaller number per call, which changes the answer. We have run it on our page on whether an AI receptionist works for a coffee shop.
Here is why a benchmark page ends up on an AI phone agent's website. At a 12% pre-tax margin, an extra A$1,000 of revenue is worth about A$120 to you, but a A$1,000 cost saving is worth the whole A$1,000. That asymmetry is why operators chase costs, and it is correct as far as it goes.
The exception is revenue that arrives with no extra cost attached. A booking taken on a phone line that was already ringing does not add a shift, does not add rent and does not add software. It adds cover count against a fixed cost base you have already paid for, which drops through at close to the gross margin rather than the net one. That is the only argument for answering the phone that survives contact with a P&L, and it is the argument. No-shows are the same lever pulled from the other end, and what an AI receptionist costs a month is the figure to put against the covers you would need to recover to justify it.
Menu prices are the other half of a margin. The ABS measured restaurant meal prices up 4.7% over the year to July 2026 against a 4.75% award wage rise, which is the pass-through test every operator should run: see how much restaurant prices have gone up in Australia.
Whether that argument holds for your venue depends on how much of your revenue actually arrives by phone, which is the thing to settle before buying anything. We set out how the category works, and who it suits, on what an AI receptionist does for a hospitality business.
Skai Solutions answers the calls your team cannot get to for a flat monthly fee, so the revenue side moves without the wage line moving with it.
Book a Free DemoMargin is the outcome. The thing you can move week to week is the two costs that produce it, so read restaurant prime cost for the combined band, and how much your restaurant is worth for what these margins do to a sale price when a buyer applies an earnings multiple to them.
Two of the costs inside that margin depend on your payment mix. See what percentage of restaurant payments are cash for the national benchmark and the banking and reconciliation time a high cash share actually costs you.
A 6.65% margin is the answer to how much you keep. The more useful question is how much you have to sell before you keep any of it: see restaurant break even point, which puts the sector break even at about 89% of the trade a venue is already doing.
Worked from ATO benchmark averages, the implied pre-tax margin is about 16% for a restaurant turning over A$65,000 to A$500,000, 12% from A$500,001 to A$2 million, and 9% above A$2 million. Those are Skai Solutions' subtractions from the ATO's published total-expenses averages, not figures the ATO publishes as margins.
Worked the same way, the ATO benchmark implies about 21% pre-tax for a coffee shop turning over A$65,000 to A$250,000, 14% from A$250,001 to A$600,000, and 11% above A$600,000, all before the owner is paid. Treat a single-figure answer from an overseas source with suspicion: most published coffee shop margins are American, are net of an owner's wage, and are not measuring the same thing as the ATO table.
On the benchmarks, at the small end, yes. A coffee shop turning over A$65,000 to A$250,000 reports average total expenses of 79% of turnover against 84% for a restaurant in its smallest band, which implies about 21% against 16%. The gap closes as both get bigger, because labour and rent grow faster than the menu price does.
Because the cost base changes shape. In the ATO data, restaurant labour runs 18% to 30% of turnover in the smallest band and 27% to 34% in the largest, while rent falls from 11% to 17% down to 6% to 9%. A small owner-operated venue is buying less labour, often because the owner is the labour and is not in the expense line at all.
It depends how you are structured, and this is the single most misread part of the benchmark. For a sole trader or partnership the owner's own labour is usually not in total expenses, so the implied margin is profit before the owner has been paid anything. For a company paying the owner a wage, it usually is. Compare like with like or the number is meaningless.
No published equivalent exists. The nearest useful figure is the Restaurant Association of New Zealand's estimate that wage costs run at about 40% of hospitality revenue, from its 2025 Hospitality Report. Do not apply the Australian percentages to a New Zealand venue.
Whichever of your three big lines is furthest outside its band, and the benchmarks tell you which one that is. In practice it is usually cost of sales, because a menu priced eighteen months ago against today's invoices is the most common cause of a margin that quietly slid.
Related: what the average restaurant makes in Australia, on the ABS figures released 18 September 2026, how many Australian hospitality businesses actually survive, restaurant rent as a percentage of turnover, from the same ATO benchmark tables.