Understanding your numbers: A guide for Café Owners

Imagine closing up after a busy day. The till looks healthy, but you’re still worried about all those supplier payments due and payroll at the end of the week. You’re not sure if there’ll be enough left for yourself, or even if the café is truly doing well. It’s a familiar feeling for many café owners.

It’s easy to focus only on daily sales or cash in the bank, but that’s only half the picture. When you take into account possible delivery partner income, stock levels and price fluctuations, there’s more of the puzzle to consider. Tracking financial performance helps you see the full picture. But understanding your numbers isn’t about being an accountant; it’s about using those numbers to make better-informed decisions.

Why your numbers tell the truth

Financial numbers tell a story, and when you learn the basics, it’s a story that’ll show you what’s working, what’s not, where the money’s really going, and even what the future could look like. They can guide you to which are your most profitable items and which ones are costing you more than they bring in. So, is that busy day a profitable day? Or are rising prices of coffee beans quietly eating into your margins on each cup sold?

Understanding these key numbers can help you truly understand your business. The clarity of understanding your key numbers brings clarity and confidence, not added complexity.

The 4 key numbers every café owner must track

Track your sales trends

This means looking beyond daily takings. It means tracking sales over weeks and months to help you identify seasonal trends. Are some days busier on certain weeks than on others? You might notice that your flat whites fly off the counter on weekday mornings, while toasties are your bestseller during weekend brunch hours. Tracking these trends can help you plan effectively. Not just to ensure the right stock levels at the right time, but also to assist in staff planning so that you’re not paying employees to work at quieter periods and finding yourself rushed off your feet on busier days because you were unprepared for it.

Keep an eye on your margins

This is simply the price you charge, less the cost to produce the finished item for the customer. Some items will have higher margins than others, but if you don’t measure this regularly for each item on your menu, these margins can slip unnoticed. You might find your oat milk lattes cost more to produce than you realised, or that your sandwiches are your most profitable items. Eventually, the busy days and weeks can feel less and less worth the effort for the money that you’re left with at the end of each week.

Know your overheads and breakeven point

Rent, business rates, insurance, waste disposal and payroll are generally consistent costs, even when sales fluctuate. It’s important to be aware of the breakeven point across your menu. To find your breakeven point:

1. Start with the gross profit of each item on your menu.

2. Then calculate your average gross profit per sale.

3. Divide your monthly overheads by that figure, and you’ll know on average how many sales you need to make before turning a profit.

For example, if your monthly overheads are £3,000 and the average gross profit per item on your menu works out to £2.50 per item, then you need to sell (on average) 1,200 items per month before the business starts to make actual profit. Knowing this number helps you plan confidently instead of guessing.

Manage your cash flow carefully

You’ve worked hard to get your margins right, and things finally seem to be headed in the right direction. But you’ve got suppliers to pay and payroll on Friday. You’re relying on the money due from one delivery partner to pay the suppliers, and your card income on Friday to pay your staff.

It may seem fine at first, even necessary in the beginning, but sooner or later, luck will run out, leaving you with unhappy suppliers - but, more importantly, an unhappy team. You can be profitable and still run out of cash. The saying “Cash is king” is better seen as “Cash-flow is king.”

Once you start tracking these four figures regularly, you’ll begin to see patterns that make your daily decisions easier.

3 Common myths that can hold café owners back

“I don’t have time for numbers”

If you’re on a tight budget or you just simply like the idea of keeping your own books, it doesn’t have to take a huge amount of time if you know how to set your systems up from the beginning. Just setting aside as little as thirty minutes per week can be enough, depending on your needs. If you truly can’t find the time, or just really don’t want to do it yourself, you can always outsource the work to someone who knows what they’re doing. As long as this person provides regular updates on the key numbers and processes, this can give you peace of mind, knowing that it’s all taken care of.

“My accountant handles that”

If you only see your accountant once per year, they’re merely taking care of your compliance. While this is definitely important, filing your tax return and telling you how much tax you need to pay, you should always know this well before tax return time. If you’re a sole trader, your tax year ends in April, and many café owners aren’t informed of their tax liabilities until January, when the tax has to be paid!

“I’m bad at maths”

Tracking your performance isn’t about maths, it’s about meaning. If you’re working from a spreadsheet, you only need a few formulas to work out the numbers. You don’t have to be a mathematician to understand the story that your numbers tell you over time.

How knowing your numbers makes daily decisions easier

When you keep an eye on key metrics, you can manage the business much more effectively. You can see not only when prices need to change, but you can also adjust them with confidence, knowing that you’ve done so in a way that your profitability doesn’t suffer. Knowing your sales trends over the month or fluctuations due to seasonality can really give you peace of mind, knowing that you’re prepared for the quieter weeks, instead of panicking. Your numbers can indicate when it’s time to hire another team member, or even reduce hours in your workforce to save unnecessary spending.

You don’t have to be a numbers person, but simply knowing these figures and insights into your business can really help to bring clarity and calm to what could otherwise be seen as a huge stress.

Where to start. Small steps that make a big difference

Getting started with your numbers can seem overwhelming, especially if the idea of measuring your business with these metrics is new to you. If that’s the case, then small, incremental steps are the best approach.

Review your sales and costs weekly

o Each time you get a supplier invoice, look for any price changes, as these can creep up without the supplier letting you know.

o Look at your sales for the week, specifically at which items are selling well and for which items sales are dropping.

o This can all be tracked on a simple spreadsheet. If you’re not comfortable with setting it up, your Accountant or Bookkeeper will be able to help you with this.

• Compare your Gross Profit % monthly

o This is crucial to profitability. If this figure starts to dip, you need to investigate why. It’s also important to recognise reasons for any increase in this metric so you can understand what is working well in your business.

• Ask your Accountant or Bookkeeper to explain one thing that you don’t understand

o You don’t need to become a bookkeeper overnight. Even if you outsource your bookkeeping, it’s important to understand what your numbers are telling you.

o Regular meetings with your Accountant or Bookkeeper can help keep you up to speed with what the numbers are telling you, and any changes in legislation that can impact the finance function of your business.

If you can deepen your knowledge and understanding of your business's financial aspects, you can set yourself up for success rather than stress. When you understand your numbers, you gain clarity from your books, allowing you to make better decisions and feel more in control.

If you’d like to run your café with more clarity and confidence, or if you want support with the finance function of your business, click here to learn more about how we can help.