Labour is one of the largest costs in any cafe.

And for most operators, it’s also the one that feels the hardest to control.

If your wage bill feels high, it probably is — but not always for the reason you think.

This guide breaks down what labour costs should look like in Australian cafes, why they blow out, and what actually needs to change to bring them back under control.

What should labour costs be in a cafe in Australia?

For an established cafe, labour should typically sit between:

• 28%–35% of revenue

Anything above this starts to compress margins quickly.

At 38–40%, profitability becomes very difficult unless pricing or volume compensates.

Why this percentage matters

Labour is not just a cost — it’s tied directly to revenue generation.

If labour increases without a corresponding increase in revenue, your margin disappears.

Why are my cafe labour costs so high?

High labour costs are rarely just about wages.

They are usually a result of how the business is structured.

1. Rosters built around people, not demand

Many cafes roster based on staff availability rather than customer demand.

This leads to overstaffing during slow periods and inefficiency across the day.

2. Low revenue per staff hour

If your team is generating low revenue per hour, labour will naturally sit higher as a percentage.

This is often caused by:

• low average spend per customer
• slow service flow
• inefficient ordering systems

3. Operational inefficiencies

Poor workflow increases labour requirements.

If your team needs more people to achieve the same output, labour costs rise.

4. Overstaffing to compensate for weak systems

Instead of improving systems, many cafes add more staff.

This temporarily solves pressure, but increases long-term cost.

How can I reduce labour costs without cutting staff pay?

Reducing labour costs is not about paying staff less.

It’s about improving efficiency and output.

Align labour with hourly revenue

Track sales by hour and match staffing levels accordingly.

This is one of the fastest ways to improve labour percentage.

Improve service flow

Faster, smoother service reduces the number of staff required.

Small improvements in workflow can have a large impact.

Increase average spend per customer

If each customer spends more, your labour percentage improves without reducing staff.

Define clear roles for each shift

When roles are unclear, productivity drops.

Clear responsibility increases output per staff member.

What is revenue per staff hour in a cafe?

This is one of the most useful metrics for understanding labour efficiency.

It measures how much revenue each staff member generates per hour worked.

Higher-performing cafes consistently generate more revenue per staff hour with the same or fewer people.

What separates efficient cafes from overstaffed cafes?

Efficient cafes are not understaffed.

They are well-structured.

• They roster based on demand
• They optimise workflow
• They track performance metrics
• They train staff for speed and clarity

Overstaffed cafes rely on extra people to solve operational problems.

What should I fix first if labour costs are too high?

Start here:

1. Review labour vs revenue by hour
2. Identify slow periods with excess staff
3. Look for workflow inefficiencies

Focus on structure before reducing team size.

Final thoughts

Most cafes don’t have too many staff.

They have systems that require too many staff.

Fix the system, and labour costs follow.