Key Performance Indicators Every Coffee Shop Should Monitor

This article originally appeared in a print handbook for coffee shop leaders.

Every coffee shop defines success differently. Some owners measure it by a specific bank balance; others by the number of people they can employ; still others by how many new locations they can open as the business expands.

Trying to monitor every conceivable business metric—sales, costs, projections, reports—can quickly become overwhelming. The good news is that you don’t need to track all of them. In fact, only a handful will truly matter for your particular goals.

Yet even though “success” is personal, certain universal metrics can help any owner gauge the health and progress of a coffee shop. We spoke with café owners and consultants about which numbers deserve the most attention, covering everything from revenue and COGS to break-even points and staff retention.

Sales and Expenses

Start with the fundamentals: sales (money coming in) and expenses (money going out). That may sound simple, but looking only at total inflows and outflows won’t tell you why transactions happen or how effectively you’re generating sales and controlling costs. Within each category, several metrics can illuminate your business’s effectiveness.

Revenue

Revenue—the money brought in from operations—is a metric every coffee shop must track. Setting revenue benchmarks is essential, but owners should also use revenue data to spot trends, opportunities, and weaknesses.

Revenue Classification

Revenue classes are the sales categories that drive income. For a coffee shop, they might include:

• Espresso drinks
• Tea
• Baked goods
• Whole-bean coffee
• Merchandise and retail items
• Wholesale sales
• Sandwiches and salads

Revenue classes show which products and services generate the most (or least) income and how each category is trending. For example, if baked goods sales drop 20% month over month, that’s a signal something may be wrong.

Revenue Trends by Time Period

Anyone who has worked as a barista (highly recommended for aspiring owners) knows that January is often the slowest month. Customers are recovering from holiday spending and travel, and overall spending declines.

Revenue can fluctuate by season, month, day of the week, or even hour. You’ll only see these patterns by breaking down your sales reports.

For instance, if Tuesdays are your slowest day, you can either try to boost sales that day or reduce costs by adjusting labor scheduling.

Grit Coffee, located in the college town of Charlottesville, Virginia, experiences annual population shifts. One of its core revenue metrics is year-over-year (YOY) sales, which it uses to plan labor, menus, and more. In a previous interview with our website, Dan FitzHenry, co-owner and general operations manager at Grit Coffee, explained, “We’ll look at YOY sales and the transition periods where students are going out of town or back into town.”

Revenue KPIs

There are countless ways to analyze revenue—daily sales, specific monetary targets, breakdowns by sales channel, and so on.

But obsessing over every revenue metric will drive most owners crazy. Erica Escalante, a café and bakery consultant with over 15 years of industry experience, notes that analyzing granular metrics like hourly sales is useful early on. As years pass, though, it becomes less critical to track every tiny data point.

“As you get more mature in your business, you can start stepping back and stop paying attention to these little metrics where you analyze numbers all day,” she says. “And instead, you can do this once per month and eventually once per quarter. The goal is to understand the fluctuations at the beginning, have your big benchmarks, and work toward strategizing for the big goals.”

Instead, choose three or four revenue metrics that matter most and focus on them.

Karen Bassett, co-founder and CEO of Wayfarer Coffee Roasters in Laconia, New Hampshire, explains that identifying a few key benchmarks can reveal revenue opportunities right in front of you. “Our director of operations has benchmarks to hit weekly and monthly,” she says. “So, he knows how many hours he can give for payroll. He knows what our average sales are. He knows what [goals] we’re trying to hit. As a cafe or coffee company owner, the key is finding that balance between saving money and generating revenue.”

By analyzing those benchmarks, the Wayfarer team realized that opening on Sundays—a practice they hadn’t traditionally followed—could significantly boost annual revenue. “That became our second-busiest day of the week and added hundreds of thousands of dollars in revenue per year,” Bassett says.

Escalante recommends making “average ticket size” one of your revenue metrics. “Average ticket size is how I monitor the health of sales,” she says. “When I’m thinking about increasing sales, I’m watching that metric and analyzing how much customers are spending per visit.”

Cost of Goods Sold (COGS)

The old saying “you have to spend money to make money” holds true—especially for coffee shops, which depend on many ingredients and components to create drinks, food, and customer experiences.

COGS calculates the direct costs of producing the goods you sell.

In a coffee shop, these costs include:

• Materials (cups, lids, sleeves)
• Ingredients (whole-bean coffee, milk, syrups)
• Labor
• Overhead (rent, utilities, etc.)

Higher costs mean lower margins, and vice versa.

Consider the cost of making a 12oz latte*:

• Coffee: $0.15
• Milk: $0.30
• Cup: $0.05
• Lid: $0.05
• Sleeve: $0.10
• Labor: $0.40
• Overhead: $0.40

Total cost: $1.45

*Your actual costs will vary.

If you sell that latte for $2.50, you earn only $1.05 in revenue. Depending on your model, a 42% margin may or may not cover all costs.

Calculating and monitoring COGS helps ensure ingredient, inventory, and labor costs stay manageable, and it also tells you whether your prices are appropriate.

Our director of operations has benchmarks to hit weekly and monthly. So, he knows how many hours he can give for payroll. He knows what our average sales are. He knows what [goals] we’re trying to hit. As a cafe or coffee company owner, the key is finding that balance between saving money and generating revenue.

karen Bassett, wayfarer coffee roasters

Dr. Kenneth Thomas, owner of Umble Coffee in Starkville, Mississippi, closely monitors COGS to set prices. “Let’s say your cost of goods sold [for a cup of coffee] are arbitrarily $2 and you’re selling it for $3,” he says. “That’s likely not high enough of a margin after factoring in all of your other costs to run the business. So, you can do one of the following things: leave it and find a way to increase volume, take it off the menu, or increase pricing.”

Escalante agrees, adding that COGS should ideally be below 30% of the total budget. “With COGS overall, it’s about understanding and controlling your costs and pricing out your menu accordingly. The number one mistake I see coffee shop owners make is not pricing out their menu properly. Pricing out your menu is the number one way to make more money.”

Gross Profit and Net Profit

A common mistake among first-time owners is confusing gross profit with net profit.

Gross profit is what remains after subtracting COGS from revenue. Net profit is what’s left after all business expenses are deducted.

The key takeaway: having a gross profit doesn’t guarantee a net profit. Other expenses—debt payments, taxes, marketing, software subscriptions—can eat into your ability to turn a net profit.

Break-Even Point

Opening and running a coffee shop is expensive. You need to recoup all your costs. But without calculating the break-even point, you won’t know how many cups of coffee or bags of beans you need to sell to get there.

Use this formula to find your break-even point (for the whole business or a specific expense):

Break-even point = Fixed costs / Gross profit per product

Fixed costs stay the same month to month and can include rent, utilities, insurance, contracted services like pest control, salaried labor, and more.

Since products have different gross profit margins, you can use an average gross profit margin to calculate a rough break-even point. This gives you a general idea of how many cups of coffee, sandwiches, or bags of whole-bean coffee you need to sell to break even on your initial investment.

Customer Acquisition Cost

Attracting customers to a new coffee shop isn’t cheap—think signage, social media, flyers, and community networking. That’s why calculating customer acquisition cost matters:

Customer acquisition cost = Total spent on sales and marketing / Number of new customers

Understanding this metric helps owners make smart marketing decisions. If a social media agency charges $2,000 per month but brings in only 40 new customers, you’re paying $50 per new customer. Unless those customers spend more than $50 per order, the agency may not be a wise investment. Conversely, a $100 partnership with another local business that yields 100 new customers could be well worth it.

Labor Costs

Labor is essential: baristas to make drinks, cashiers to handle transactions, kitchen staff to prepare food. Depending on your model, these roles may be filled by three people or shared by one or two staff members.

In analyzing benchmarks, the team at Wayfarer Coffee Roasters realized that if they opened on Sundays—a business practice they had not traditionally followed—they could generate significantly more revenue each year. “That became our second-busiest day of the week and added hundreds of thousands of dollars in revenue per year,” says Bassett.

While roles and responsibilities are a separate topic, managing labor costs is critical. Ideally, labor should be about 20–30% of expenditures for a given period. As Escalante notes, these ranges can vary based on factors like the mix of hourly and salaried employees or your business structure and barflow. For example, a local café run by a general manager may have a higher labor percentage than a regional chain drive-thru with multiple hourly employees.

Calculate labor cost percentage with this formula:

Labor cost percentage = (Labor Costs / Total Revenue) x 100

Escalante points out that if your labor cost percentage is above average (35–40+%), those extra costs are coming from another part of your budget, such as COGS or marketing. “When a part of your budget is bigger, it’s not necessarily bad! But, you’re going to have to take away from something else. All aspects of your budget affect each other,” she says.

Some periods are slower or busier, and staffing levels affect daily profitability. Dr. Thomas tracks not only total labor cost percentage for a period but also hourly labor percentage. “In a perfect world, I would like to keep it at 25 to 35%,” he says. “You know, some days we hit that and some days, we don’t. For example, looking at our numbers in real time, right now we’re at 28.34% for today.”

Employee Retention Rate

A common misstep Escalante sees is new owners hiring without understanding how to lead or without a leadership presence in the café. This can lead to retention problems.

Calculate employee retention rate as follows:

Employee retention rate = (# of employees at end of period / # of employees at start of period) x 100

Retaining staff can be challenging for many reasons. To ease the process, she recommends first clarifying and solidifying your shop’s mission and values before hiring. “Everything you do in your coffee shop sends a message to somebody. Most people don’t know what their brand is or explore it, and then they start adding people to the mix and it causes a lot of confusion, disruption, and fires.”

Qualitative Metrics

Many owners prefer hard data—knowing exactly how many blueberry scones sell in a week or how milk prices fluctuate. But some metrics aren’t quantifiable, yet they’re just as important for long-term success.

Customer Satisfaction

Yelp and Google offer star ratings, but they tell only part of the story. Moreover, sales and customer satisfaction aren’t always directly correlated. So how can you find out how customers truly feel about your shop, products, and service?

Average ticket size is how I monitor the health of sales. When I’m thinking about increasing sales, I’m watching that metric and analyzing how much customers are spending per visit.

Erica Escalante, cafe and bakery consultant

Bassett advises not paying too much attention to online reviews and instead focusing on building relationships with customers. “I’ve seen many, many business owners obsess about the one negative review out of the 500 amazing reviews they’ve got,” she says. “That’s not where your energy needs to be, that’s not fixing anything. Focus instead on creating a positive customer experience and an excellent-quality product.”

The easiest way to gauge customer satisfaction? Ask!

Quality of Life

Let’s be honest: opening and operating a coffee shop requires a lot of work. As owner, you’re responsible for making sure everything runs properly. Sometimes it feels like you’re constantly putting out fires. Escalante calls this “being a firefighter.”

“If you feel like you are constantly putting out fires all the time and there isn’t a break, that’s not a healthy metric,” she says. “There are seasons in business where two people put in their notice at the same time, another is having a baby, and it’s chaos. But if there’s not an endpoint to that season, then that is a metric that something is going wrong—either in leadership, or operational leadership, like you don’t have good policies in place, and you’re not being a good leader.”

Escalante notes that when an owner experiences lower quality of life or lack of balance, it’s often tied to interpersonal relationships and leadership skills. “When I see business owners who are in year three and it’s still nonstop, [I tell them] there is a way to get out of that.”

As you go through the journey of opening and running a coffee shop, watch how often you have to play firefighter. If it becomes your full-time job, leaving little time for metrics like profitability or customer satisfaction, it’s time to change something—staffing, role responsibilities, internal systems.

Let’s say your cost of goods sold [for a cup of coffee] are arbitrarily $2 and you’re selling it for $3. That’s likely not high enough of a margin after factoring in all of your other costs to run the business. So, you can do one of the following things: leave it and find a way to increase volume, take it off the menu, or increase pricing.

Dr. Kenneth Thomas, Umble Coffee

As your business grows and develops documented processes and a dedicated team, your quality of life will begin to rebalance. Bassett explains that after several years in the coffee business, she and her team had to discuss what success meant for them. “You have to start with the question, ‘What is success?’ Is it solely financial? For my family, success means we don’t have to clock in for shifts. That’s something we value as a family.”

Reaching that point takes time, well-organized systems, and a reliable team. Bassett notes that while Wayfarer Coffee Roasters isn’t a big company with numerous full-time employees, those in full-time positions take on larger responsibilities to keep things running smoothly—leaving Bassett more time with her family.

Ultimately, analyzing metrics is about ensuring your business stays on track to meet its defined goals. For some, that’s a financial target; for others, it’s a quality-of-life goal. As Escalante reminds us, “You have to focus on yourself and your goals. Make that plan and stick to your budget!”