How much should a small café spend on wages as a share of revenue?
First year owning a 40-seat café, one espresso machine, four staff. Wages feel like they eat everything. What is a healthy labour percentage for a small specialty café, and what do owners do when it creeps up?
For an independent specialty café, labour including the owner's own pay usually lands between 28% and 35% of revenue. Under 25% and you are probably under-staffing the rush or under-paying; over 38% for more than a couple of months and the business is paying you to work there.
A typical cost shape for a small specialty café, as owners in the room report it. Your numbers will differ; the point is the proportions:
| Line | Share of revenue | Notes |
|---|---|---|
| Cost of goods (coffee, milk, food, packaging) | 28–34% | Coffee alone is often 8–12%; milk and food move it |
| Labour incl. owner pay and employer taxes | 28–35% | Include yourself at a real wage, not zero |
| Rent and rates | 8–14% | Over 15% and location is doing the damage |
| Utilities, cleaning, maintenance | 4–6% | Machines and grinders need a service budget |
| Card fees, software, marketing, insurance | 4–7% | Card fees alone are 1.5–2.5% |
| Net before tax | 5–15% | A good year is 10%; a great year is 15% |
When labour creeps up, the fixes that work, in order of pain:
1. Match the rota to the revenue curve, not the opening hours. Most cafés are over-staffed 2–4pm and under-staffed 8–10am. An hour-by-hour sales report from the till is the whole analysis.
2. Cut the tail of the day before cutting people. Closing at 4 instead of 5 often removes a low-revenue hour and a whole shift.
3. Raise prices before cutting hours. A 30 cent increase on the flat white is usually invisible to customers and worth more than a shift a day.
4. Cross-train. A barista who can do the food prep means one fewer body at 11am.
5. Look at the owner's hours last. Working 70 hours to keep labour at 25% is not a business, it is a job with risk.
What not to do: cut the person who dials in. Quality drops, regulars notice within a week, and revenue follows. Labour percentage is a symptom; the rota and the pricing are the causes.
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