ATO BENCHMARKS, 2023-24

Gross margin benchmarks for Australian restaurants

By Ivanka Menken, Strategic Mentor·Last updated 21 October 2026·Figures from the Australian Taxation Office

In the ATO 2023-24 small business benchmarks, Australian restaurants turning over between $500,001 and $2,000,000 report cost of sales of 32% to 38% of turnover, a gross margin before wages of 62% to 68%. Total expenses run 84% to 93%, which leaves 7% to 16% of turnover before the owner, family members and tax are paid.

Medium turnover range, $500,001 to $2,000,000, turnover excluding GST

62% to 68%

Gross margin before wages

100% less cost of sales of 32% to 38%

84% to 93%

Total expenses to turnover

ATO key benchmark range

7% to 16%

Left after total expenses

Before the owner, family members and tax are paid

What are the 2023-24 benchmarks for restaurants?

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 medium turnover range: $500,001 to $2,000,000. The figures in the text on this page come from that band, and the table shows every band the ATO publishes for restaurants.

A business turning over more than $2,000,000 falls in the high 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.

Medium band: $500,001 to $2,000,000

Closest to $500K to $3M

Total expensesATO ratio: 84% to 93%
Cost of sales, excluding wagesATO ratio: 32% to 38%
Gross margin before wagesCalculated: 100% less cost of sales: 62% to 68%
Left after total expensesCalculated: 100% less total expenses: 7% to 16%

Low band: $65,000 to $500,000

Total expensesATO ratio: 79% to 89%
Cost of sales, excluding wagesATO ratio: 32% to 39%
Gross margin before wagesCalculated: 100% less cost of sales: 61% to 68%
Left after total expensesCalculated: 100% less total expenses: 11% to 21%

High band: more than $2,000,000

Total expensesATO ratio: 88% to 94%
Cost of sales, excluding wagesATO ratio: 31% to 36%
Gross margin before wagesCalculated: 100% less cost of sales: 64% to 69%
Left after total expensesCalculated: 100% less total expenses: 6% to 12%

ATO 2023-24 benchmark ranges for restaurants, as a percentage of turnover, by turnover band
% of turnover	Low band$65,000 to $500,000	Medium band$500,001 to $2,000,000Closest to $500K to $3M	High bandMore than $2,000,000
Total expensesATO ratio	79% to 89%	84% to 93%	88% to 94%
Cost of sales, excluding wagesATO ratio	32% to 39%	32% to 38%	31% to 36%
Gross margin before wagesCalculated: 100% less cost of sales	61% to 68%	62% to 68%	64% to 69%
Left after total expensesCalculated: 100% less total expenses	11% to 21%	7% to 16%	6% to 12%

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 restaurants?

At the band’s ratios, a business turning over $1,000,000 would have $70,000 to $160,000 left after total expenses, about $1,350 to $3,080 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, restaurants keep 11.5% of turnover after total expenses, 3 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 $500,000) keep 11% to 21% of turnover; in the band closest to you it is 7% to 16%. 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 restaurants?

At the midpoints, restaurants keep a gross margin before wages of 65%, 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 53.5% 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 restaurants 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 30% to 36% of turnover, the gross margin before wages would rise from 62% to 68% to about 64% to 70%, and the share left after total expenses from 7% to 16% to about 11% to 20%.

At the midpoint that is 11.5% becoming 15.7% of turnover, about 37% 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 restaurants sit among Accommodation and Food Services industries?

We grouped the ATO industries under their ANZSIC divisions so you can compare restaurants with their neighbours. Of the 9 Accommodation and Food Services industries on this site, restaurants keep the 4th 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. Accommodation and Food Services industries in this data; the dashed line is the median of all 96 industries (14.5%).

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 32% to 38% and 84% to 93% 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 restaurants in Australia?

In the ATO 2023-24 benchmarks, restaurants turning over between $500,001 and $2,000,000 report cost of sales of 32% to 38% of turnover, so the gross margin before wages is about 62% to 68%. 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 restaurants turning over $1,000,000?

For restaurants, the ATO 2023-24 bands are: low turnover range, $65,000 to $500,000; medium turnover range, $500,001 to $2,000,000; high turnover range, more than $2,000,000. A business turning over $1,000,000 sits in the medium 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: Restaurants. Division grouping (ANZSIC H, Accommodation and Food Services) 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 →