A café’s reported wages can materially understate the labour needed to keep trading. The payroll may exclude the owner’s unpaid opening shifts, ordering, bookkeeping, staff cover and weekend supervision. It may also fail to reflect the classifications, penalties, overtime, breaks, leave and superannuation that apply to the hours actually worked.

A buyer should rebuild a compliant, workable roster from source records and cost the people required after settlement. Treat the seller’s wage percentage as a result to explain—not a benchmark to copy. If the buyer will not personally replace the owner, the forecast needs a credible paid replacement.

Start with the work, not the payroll total

Map every recurring task from first arrival to final lock-up. Include preparation, service, food production, washing, cleaning, stock receipt, ordering, cash reconciliation, payroll, maintenance coordination, social media and staff management. Then identify who performs each task, on which days, for how long and at what skill level.

This exposes the difference between three measures:

  1. Rostered hours: what the schedule expected.
  2. Worked hours: start, finish and break times actually recorded.
  3. Required hours: the labour a sustainable post-sale operation needs, including work currently absorbed by the owner or family.

The third measure is the acquisition question. A low wage bill is not an advantage if it relies on sixty-hour owner weeks, missed breaks or key tasks performed outside payroll.

Determine which employment instrument applies

Do not assume every café is covered by the same award. Fair Work guidance says the Restaurant Award generally covers cafés mainly serving food and drinks for consumption on the premises, while the Fast Food Award can cover operations mainly selling takeaway products. The Hospitality Award can apply where a café forms part of a hotel or resort, and other settings can lead to other coverage (Fair Work Ombudsman).

Coverage depends on the business and the employee’s work. Obtain the seller’s written coverage analysis, any enterprise agreement, employment contracts and classification mapping. Compare each employee’s actual duties with the relevant classification—not merely the title “barista”, “all-rounder” or “manager”.

Where the Hospitality Award applies, it addresses employment types, classifications, ordinary hours and rostering, breaks, minimum rates, allowances, overtime and penalty rates. It also requires full-time and part-time rosters to show start and finish times and contains rules for roster changes and breaks (Fair Work Ombudsman). Other applicable awards have their own terms. Use current official instruments and specialist advice rather than embedding today’s rate table into a long-term forecast.

Request a roster-to-payroll evidence pack

Ask for at least 12 complete months, and longer where seasonality or recent staffing changes make one year unrepresentative:

  • published rosters and every amended version;
  • clock-on records, timesheets, break records and POS staff-login data;
  • payroll journals, pay slips and bank payment files;
  • employment contracts, classifications, salaries, casual or part-time status and agreed availability;
  • overtime, penalty, allowance, leave and annualised-wage calculations;
  • superannuation reports, clearing-house confirmations and unpaid-contribution details;
  • workers’ compensation premiums and claims information;
  • accrued leave reports and employee commencement dates;
  • contractor invoices and the basis for treating each worker as a contractor; and
  • a diary of all owner and family work, including duties performed before opening and after closing.

Fair Work states that time and wages records must generally be kept for seven years and include prescribed employee, pay and hours information; records must be legible, in English and not false or misleading (Fair Work Ombudsman). Missing records are therefore both a costing problem and a compliance question.

Reconcile hours, payments and operating reality

Build one row per employee per shift. Compare rostered start and finish times with clock records, POS activity, alarm logs or opening records, then connect the paid hours to payroll and the bank file. Record breaks, overtime triggers, weekends, public holidays, allowances and leave separately.

Do not stop when payroll agrees with the general ledger. Both may omit work. Investigate:

  • early preparation or closing time outside scheduled shifts;
  • managers on a salary whose actual hours are not recorded;
  • staff routinely clocking out before completing duties;
  • cash payments, “trial” shifts or family assistance outside payroll;
  • contractor invoices that may mask an employment relationship;
  • unexplained gaps between trading hours and staffed hours; and
  • roster reductions shortly before sale that do not appear operationally sustainable.

The ATO’s super guarantee page sets out the current rate and payment framework for eligible workers (Australian Taxation Office). Reconcile contribution reports to payroll and evidence of receipt by funds; do not assume an expense accrual proves payment.

Put a market cost on owner labour

Ask the owner to log two to four representative weeks and describe seasonal differences. Split the time into operating roles: barista, cook, floor supervisor, cleaner, buyer, bookkeeper and general manager. Eliminate duplicated or genuinely discretionary tasks, but retain work the business still needs.

Then choose a replacement for each block:

Owner activity Buyer test Forecast treatment
Regular service shift Would the shift remain if the owner left tomorrow? Cost at the applicable role, hours and on-costs
Management and ordering Can an existing employee absorb it within paid capacity? Add manager hours or a separate role where required
Bookkeeping or marketing Is it essential, and can it be outsourced? Use supported employment or supplier cost
Emergency cover How often did it occur and what caused it? Model relief capacity rather than assuming free availability
Inefficient or personal task Does the buyer’s operating model need it? Exclude only with a documented reason

Hypothetical example: the accounts show $18,000 monthly wages, but the owner also works five opening shifts and completes ordering and payroll without a wage. A replacement roster adds a supervisor for those shifts and paid administration time, plus applicable on-costs. The buyer’s maintainable labour cost is therefore higher than $18,000. The figures and roles are illustrative only; the correct result depends on verified hours and current obligations.

Treat employee transfer issues separately

The buyer’s lawyer should determine whether there is a transfer of business, which employees will be offered work, what service must be recognised and how accrued entitlements are handled in the transaction documents. Fair Work explains that a new employer must recognise prior service for most entitlements in a transfer of business, while particular treatment can apply to annual leave, redundancy, long service leave, unfair dismissal and notice (Fair Work Ombudsman). The answer depends on the facts and legal structure.

Keep two schedules: one for future labour needed to trade and another for historical exposure or settlement adjustments. Do not bury potential underpayments, unpaid super, leave balances or employee claims inside a normalised wage percentage.

Questions the buyer should resolve

  • Which award, agreement or other instrument applies to each role, and why?
  • Do actual duties support the stated classification?
  • Can every worked hour be traced from time record to payroll and payment?
  • What work does the owner perform for no wage, and who performs it after completion?
  • Are annualised or salary arrangements documented and reconciled where required?
  • Which employees are essential to opening, food production and peak service?
  • What happens to labour cost if trading hours, weekend mix or customer volumes change?
  • Which transfer, entitlement and historical-compliance matters remain for legal and payroll specialists?

Employment lawyers or workplace-relations advisers should confirm coverage, transfer and potential underpayment issues. Accountants can test payroll reconciliations and normalised earnings; payroll specialists can rebuild calculations; and tax or superannuation advisers can address specific contribution questions. The buyer still needs an operating roster that works in practice.

Sources

Disclaimer

This article provides general information only. It does not constitute legal, tax, accounting, financial, credit, valuation or other professional advice. Circumstances differ. Obtain advice from appropriately qualified advisers before acting or entering a transaction.