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Would you like to run a coffee shop? In this post, we will show you the average coffee shop running cost in Australia for 2021!
Australia has a coffee culture that is second to none. Coffee shops are a social hub, as many people meet their partners or friends over a cup of joe. A coffee shop is an essential part of the Australian lifestyle, so it’s no surprise that the hospitality industry has seen rapid growth in the past few years.
We estimate that the average cost to run a coffee shop in Australia ranges between AUD$15,800 – AUD$21,500 per month. Of course there are several factors that can influence the costs of a coffee shop, so this is an estimate for a shop that sells in average 200 coffee cups daily. There is some really interesting benchmark breakdown in the ATO’s website as well if you are interested in diving deeper on the numbers.
We believe a successful coffee shop will generate a lot of income. We also believe that it is important for your coffee shop to be successful to make the right decisions to run the business. You need to select the right location, merchandise, service, and price. You also need to ensure that you have the right people on the shop floor who have the skills to run the business.
What factors can influence coffee shop running cost?
Since estimating your costs correctly is a critical aspect of your success, we’re here to help. This time we look at how much it costs to run a coffee shop in Australia. Let’s assume 200 cups of coffee are sold daily in our example below.
There are no set prices in real estate, and there are no set rules. How much a landlord charges to rent out a coffee shop depends on many factors, including the location, the size of the property, the cost of construction, and the length of the lease. The main point to note is that pricey rents will allow the shop to charge more than cheaper locations. As a general rule, it is recommended that rent does not exceed 15% of project sales.
In our example, we are assuming AUD$2-3,000 per month.
Machinery and equipment
As a coffee shop owner, you will need to acquire some equipment and furniture at the opening and later on. To start with, you will get a coffee machine, an espresso machine, and a grinder. You will also need to get barista uniforms and a cash register, to name just a few of the most important ones.
In addition to one-off purchases, all of these need to be serviced periodically. New uniforms need to be purchased, broken chairs replaced occasionally and the machines will also need to be replaced in the future.
Expect to spend at least AUD$100-500 a month.
Electricity and water
Before you can make a cup of coffee, you must first have electricity and water. The cost of them is an ever-increasing cost, and it is an expense that is becoming more and more important in the running of a business.
If you wish to find out what energy options are available to you, visit the relevant regulator’s website or contact the retailer directly.
Let’s count on AUD$400-500 a month.
One of the most important aspects of running a good business is making sure that staff are paid fairly. It’s a fine balance between keeping your employees happy and incentivizing them to stay and not paying staff too much, which can lead to a business falling apart. So, what’s a fair wage for today’s coffee shops? There’s no easy answer to this question, but it’s worth taking a look at the numbers to find out what’s a reasonable range.
Count two employees, including a barista, and a server, and you can expect an average salary of AUD$20-25 per hour. This adds to the total coffee shop running cost approximately AUD$7,500-10,000 each month in staff wages.
In a coffee shop, coffee beans will be one of the most important ingredients. The price of the beans varies according to their quality and brand.
The cost of takeaway cups is roughly 10 cents per cup. At 200 coffees sold per day, that’s roughly AUD$500 per month. AUD$3000 is estimated to be the cost of a good quality coffee bean per month.
Add to this some other expenses (e.g. snacks, milk) and you can expect to spend between AUD$5000 and AUD$6000 a month for the supplies and ingredients.
This is where you’ll most likely not have to spend a lot of your budget – the coffee shop industry is one where you’ll see great results without spending much.
AUD$300-500 per month would be an appropriate budget to add to your coffee shop running costs.
As they are not significant, these costs are grouped together in our example: employees’ training and benefits, insurance, credit card fees, and legal costs.
We estimate the total cost of these to be between AUD$500-1000 per month.
Let’s look at these costs summarised in a table:
|Rent||2000 – 3000|
|Machinery and equipment||100 – 500|
|Electricity and water||400 – 500|
|Staff wages||7,500 – 10,000|
|Supplies||5,000 – 6,000|
|Marketing||300 – 500|
|Other costs||500 – 1,000|
|Total||15,800 – 21,500|
If we assume an average coffee price of AUD$4.5, that could mean a monthly income of $27,000. With the above costs, the profit could be AUD$5,500-11,200.
BESIDES THE coffee shop running cost, WHAT ELSE CAN influence your profit?
The formula is not complicated, depending on the location, rent can be more or less expensive. The location should be carefully chosen, as there is no point in going to a secluded area no one goes to. The cost is lower, but the traffic will be too low.
The biggest problem with many coffee shops is the space they occupy. It can be tough to get a good balance when you have limited space in a coffee shop. That’s why you want to make sure you have a good range of seating options available so that you can accommodate all of your customers – even if they are all sitting at the same round bar table.
If your coffee shop is too small, it can be uncomfortable for visitors, which can lead to a loss of revenue. In addition, a larger shop can serve more potential customers, although we will also have higher costs (rent, electricity, water, staff wages and so on).
Seasonality is a significant factor. Coffee consumption drops by 10-15% during the summer and increases during the autumn and winter.
Your pricing policy
Setting a price for your coffee is also very important since you want to make sure that you’re getting a return for all the work you put into your business. Here’s an article that will give you some guidelines for pricing your coffee: How to price your coffee?
Running (working) capital/cost
Your business needs enough cash for payroll, to pay invoices on time, and to handle unexpected issues that may arise. Having limited capital can cause problems not only for yourself but also for your suppliers.
The coffee shop industry is constantly changing and evolving. If you’re looking to start your own coffee shop, then you’ve come to the right place. Our blog is here to help you take the first step. If you’re serious about opening a coffee shop, you need to be serious about everything that goes into it.