ATO BENCHMARKS, 2023-24

Gross margin benchmarks for Australian health food stores

By Ivanka Menken, Strategic Mentor·Last updated ·Figures from the Australian Taxation Office

In the ATO 2023-24 small business benchmarks, Australian health food stores turning over more than $600,000 report cost of sales of 57% to 65% of turnover, a gross margin before wages of 35% to 43%. Total expenses run 87% to 94%, which leaves 6% to 13% of turnover before the owner, family members and tax are paid.

High turnover range, more than $600,000, turnover excluding GST

35% to 43%

Gross margin before wages

100% less cost of sales of 57% to 65%

87% to 94%

Total expenses to turnover

ATO key benchmark range

6% to 13%

Left after total expenses

Before the owner, family members and tax are paid

What are the 2023-24 benchmarks for health food stores?

The ATO splits each industry into turnover bands and publishes a range for each. The band closest to a business turning over $500,000 to $3,000,000 is the high turnover range: more than $600,000. The figures in the text on this page come from that band, and the table shows every band the ATO publishes for health food stores.

A business turning over between $400,001 and $600,000 falls in the medium turnover range instead, and its figures are in the table too.

Cost of sales here excludes wages: the ATO takes salary and wages out of it. So one minus cost of sales is a gross margin before wages, and the gap between cost of sales and total expenses is where wages, rent and every other cost sit.

High band: more than $600,000

Closest to $500K to $3M

Total expensesATO ratio
87% to 94%
Cost of sales, excluding wagesATO ratio
57% to 65%
Gross margin before wagesCalculated: 100% less cost of sales
35% to 43%
Left after total expensesCalculated: 100% less total expenses
6% to 13%

Low band: $65,000 to $400,000

Total expensesATO ratio
73% to 89%
Cost of sales, excluding wagesATO ratio
48% to 64%
Gross margin before wagesCalculated: 100% less cost of sales
36% to 52%
Left after total expensesCalculated: 100% less total expenses
11% to 27%

Medium band: $400,001 to $600,000

Total expensesATO ratio
86% to 92%
Cost of sales, excluding wagesATO ratio
55% to 64%
Gross margin before wagesCalculated: 100% less cost of sales
36% to 45%
Left after total expensesCalculated: 100% less total expenses
8% to 14%
Turnover excludes GST. Each range covers the 30% of businesses around the industry average for that band. Source: Australian Taxation Office, Small Business Benchmarks, 2023-24 data, CC BY 2.5 AU; calculated rows by ivankamenken.com.

What do these figures mean for cash and payroll in health food stores?

At the band’s ratios, a business turning over $1,000,000 would have $60,000 to $130,000 left after total expenses, about $1,150 to $2,500 a week. That pool has to cover your own pay, tax, loan repayments beyond the interest already counted, and any growth you fund yourself.

At the midpoint, health food stores keep 9.5% of turnover after total expenses, 5 points below the median of 14.5% across the 96 industries on this site. A thinner share means growth needs more cash up front for every dollar it brings in.

Size changes the picture. Businesses in the low band ($65,000 to $400,000) keep 11% to 27% of turnover; in the band closest to you it is 6% to 13%. Part of the reason is in how the ATO counts: wages paid to staff are an expense, while payments to associated persons are left out. A bigger business carries a bigger payroll, so each extra dollar of turnover arrives with more cost attached.

How much does price change the margin for health food stores?

At the midpoints, health food stores keep a gross margin before wages of 39%, against a median of 45.8% across the 52 industries on this site where the ATO publishes cost of sales. Between cost of sales and total expenses sit wages, rent and everything else: about 29.5% of turnover at the midpoints.

Ivanka Menken’s chain starts with price: prices too low, margins thin, growth eats cash, payroll becomes a monthly fear. As arithmetic only, if health food stores in this band charged 5% more for the same work, with the same volume and the same costs, cost of sales would fall to about 54% to 62% of turnover, the gross margin before wages would rise from 35% to 43% to about 38% to 46%, and the share left after total expenses from 6% to 13% to about 10% to 17%.

At the midpoint that is 9.5% becoming 13.8% of turnover, about 45% more left over from the same work. Whether your clients would accept the price is a separate question, and the one worth testing.

Where do health food stores sit among Retail Trade industries?

We grouped the ATO industries under their ANZSIC divisions so you can compare health food stores with their neighbours. Of the 39 Retail Trade industries on this site, health food stores keep the 27th largest share of turnover after total expenses (tied), using each industry’s band closest to $500,000 to $3,000,000.

The grouping is ours, not the ATO’s; the ratios are the ATO’s. Neighbouring industries face similar costs, so a large gap to a close neighbour is worth a question about price or about the mix of work.

Share of turnover left after total expenses, at the midpoint of each industry's band closest to $500K to $3M. Retail Trade industries in this data; the dashed line is the median of all 96 industries (14.5%).
  1. Picture framing retailing23.5%
  2. Entertainment media retailing18.5%
  3. Ice cream retailing15.5%
  4. Confectionery retailing14.5%
  5. Manchester and textile goods retailing14.5%
  6. Computer retailing13.5%
  7. Watch and jewellery retailing13.5%
  8. Clothing retailing13%
  9. Florists13%
  10. Electrical and electronic product retailing12.5%
  11. Footwear retailing12.5%
  12. Garden supplies retailing12%
  13. Gift stores12%
  14. Toy and game retailing11.5%
  15. Floor covering retailing11%
  16. Motor vehicle parts and batteries retailing11%
  17. Pets and pet supply retailing11%
  18. Sports, camping and fishing retailing11%
  19. Delicatessens10.5%
  20. Discount and variety stores10.5%
  21. Homewares retailing10.5%
  22. Stationery goods retailing10.5%
  23. Fresh meat and poultry retailing10%
  24. Hardware and building supplies retailing10%
  25. Musical instrument retailing10%
  26. Pharmacies10%
  27. Book retailing9.5%
  28. Health food retailing (this page)9.5%
  29. Tyre retailing9.5%
  30. Furniture retailing9%
  31. Lawn mower retailing8.5%
  32. Fresh fish and seafood retailing8%
  33. Newsagents8%
  34. Bottle shops and liquor retailing7.5%
  35. Fuel retailing6.5%
  36. New and used car retailing6.5%
  37. Fruit and vegetable retailing6%
  38. Grocery retailing and convenience stores6%
  39. Tobacco retailing4.5%

How do you check your own numbers against these benchmarks?

Take last financial year’s turnover excluding GST. Divide cost of sales, without wages, by it; then divide total expenses, less payments to associated persons, by it. Compare both with the 57% to 65% and 87% to 94% ranges above.

A benchmark tells you where you sit. It does not tell you why, or which decision to make next. Three free tools on this site turn the comparison into a monthly habit.

CHECK YOUR OWN NUMBERS

If you would like someone to read the numbers with you each fortnight, that is what Ivanka's 1:1 mentoring is for.

What else do founders ask about these figures?

What is a typical gross margin for health food stores in Australia?

In the ATO 2023-24 benchmarks, health food stores turning over more than $600,000 report cost of sales of 57% to 65% of turnover, so the gross margin before wages is about 35% to 43%. The ATO excludes salary and wages from cost of sales, so your own figure is only comparable if you take wages out too.

Which ATO turnover band applies to health food stores turning over $1,000,000?

For health food stores, the ATO 2023-24 bands are: low turnover range, $65,000 to $400,000; medium turnover range, $400,001 to $600,000; high turnover range, more than $600,000. A business turning over $1,000,000 sits in the high turnover range. Use last year’s turnover excluding GST to find yours.

Are the ATO figures before or after the owner’s pay?

Before most of it. The ATO subtracts payments to associated persons, such as family members, from total expenses, and a sole trader or partner does not pay themselves a wage at all. So the share left after total expenses is broadly what funds the owner, tax, loan repayments and growth. Your accountant can tell you how your own returns are set up.

What does it mean if my business is outside the range?

The ATO says a business outside the key benchmark range may have room to improve, and it uses the key benchmark to spot businesses that may not be reporting all their income. Each range covers the 30% of businesses around the industry average, so many legitimate businesses sit outside it. Check your figures with your accountant first.

Where do these figures come from?

Source: Australian Taxation Office, Small Business Benchmarks, 2023-24 data, published at https://data.gov.au/data/dataset/small-business-benchmarks and licensed under Creative Commons Attribution 2.5 Australia (CC BY 2.5 AU), https://creativecommons.org/licenses/by/2.5/au/. Ratios are reproduced as published; the margins, midpoints, dollar examples, groupings and comparisons are calculated by ivankamenken.com. The ATO does not endorse this page.

ATO industry name: Health food retailing. Division grouping (ANZSIC G, Retail Trade) is ours. How the ATO calculates each ratio: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/small-business-benchmarks/small-business-benchmarks-methodology-and-ratio-calculations/how-we-calculate-benchmark-ratios

This page compares published figures. It is not financial or tax advice; your accountant does the accounts. See every industry →