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The short answer is… yes and no.
I’m often asked whether owning a cafe is a good way to make money. There are many myths out there, fueled by media headlines and casual conversations. For example, articles like this one from the Sydney Morning Herald paint cafes as gold mines:
Sounds promising, but the reality is more complex.
The Profit Margin Illusion
Many sources claim cafes make a 300–400% profit margin on a cup of coffee, but these figures often miss the bigger picture.
Let’s say a cafe makes $2 profit per cup. Our small 50m² cafe can serve at most 160 cups a day due to space and local demand. That totals $320 gross profit daily.
Sounds good, right? But before you get excited, consider all the costs: rent, wages, insurance, council fees, utilities, and more. These expenses add up quickly and significantly reduce that profit.
What the Official Numbers Say
Australian Taxation Office – Coffee Shops
The Australian Taxation Office (ATO) provides a clearer picture:
- Average cafe expenses range from 83% to 91% of revenue.
- This leaves a net profit margin of just 9% to 17% for well-run cafes.
To put it simply, for every $1 in sales, the profit after expenses is only about 9 to 17 cents.
So if your cafe makes $800 in sales one day, your real profit might be closer to $80, not $320.
The Hard Truth About Cafe Life
Like any career, passion matters most. If you go into cafes just to make money, you’ll likely be disappointed.
Think of doctors: many enter medicine expecting wealth but face long hours, stress, and demanding work — many leave disillusioned. The same applies to cafes.
Cafe owners often start their day at 5 a.m., facing cold mornings and long, physically demanding shifts. Your clothes will get stained with coffee, oil, and more.
In the early days, you might work 7 days a week for months on end, juggling everything yourself. Many owners say goodbye to weekends and free time.
After all that hard work and stress — while making only around 10 cents profit per dollar (often without paying themselves a wage!) — many leave, realizing they earn less and work more than before.
What About the Successful 10%?
It’s not all bleak. Like there are wealthy and successful doctors, there are cafe owners who thrive financially and personally.
In my next blog, I’ll discuss the mindset and strategies that separate profitable cafe owners from the rest.
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