Coffee shop profitability and payback
Illustrative case · Counter-service café in an existing leased unit · United States · illustrative leased-site case
Explore this business · Profitability and payback
The case generates $12,957 of first-year operating surplus before depreciation, interest and income tax, after paying the working owner. Scheduled debt service is $23,787. The opening reserve supports the gap; a positive mature month does not mean the first year funds itself.
Build revenue from visits and tickets
At maturity, 170 transactions per day × 30 days × $8.25 per ticket gives $42,075 monthly revenue. The first-year ramp produces $366,053 in sales. Price, demand and costs remain flat after the ramp; there is no assumed annual growth or seasonal peak. Model conventions.
Pay labor before calling it profit
| Monthly item | Amount or basis |
|---|---|
| Ingredient cost | 27.0% of sales |
| Card processing | 3.0% of sales |
| Packaging | $0.35 per transaction |
| Employee labor including burden | $8,299 |
| Owner compensation including burden | $4,480 |
| Total fixed operating costs | $18,979 |
| Mature monthly EBITDA | $8,688 |
| Mature cash after debt | $6,706 |
Employee labor is 95 paid hours per week at $18.00 per hour, plus a 12.0% allowance. The burden is a planning input, not a statutory rate. Rent is $3,500 per month. Repairs, utilities, insurance, marketing, software and administration are included in fixed costs.
| Monthly commitment | Amount |
|---|---|
| Employee payroll, including burden | $8,299 |
| Working owner compensation, including burden | $4,480 |
| Rent | $3,500 |
| Fixed utilities | $650 |
| Insurance | $300 |
| Marketing | $450 |
| Software and communications | $200 |
| Routine repairs | $300 |
| Administration | $350 |
| Cleaning | $250 |
| Other operating allowance | $200 |
| Total monthly fixed operating base | $18,979 |
Less foot traffic can exhaust cash
| Demand case | Year 1 sales | Year 1 EBITDA | Lowest cash over 60 months |
|---|---|---|---|
| Lower: 75.0% of base volume | $274,539 | −$47,220 | −$36,531 |
| Base demand | $366,053 | $12,957 | $14,069 |
| Higher: 115.0% of base volume | $420,960 | $49,063 | $27,302 |
The lower scenario changes transactions only. The opening reserve is exhausted in month 5; the negative cash balance is an unfunded requirement, not an available overdraft. Management would need to fund, reduce costs or change the concept before that point.
Capital recovery is conditional on the ramp
In the base case, cumulative operating cash before financing and income tax recovers total opening funding in month 37. The calculation includes the initial cash reserve as committed capital and changes in inventory and card receivables. It excludes a sale of the shop, release of the deposit and extra borrowing.
This is project capital recovery, not an investor return or an owner distribution date. The lower-demand case does not recover opening capital within the five-year model. Growth, replacement equipment, taxes or a new lease would change the result.
The owner’s wage and residual cash are different
The model expenses $48,000 of annual owner compensation before personal taxes. It assumes no additional distributions. Cash left after loan payments remains in the business. An absentee owner would need to budget a replacement manager and rerun both the staffing plan and the cash forecast.
| Base reference case | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Revenue | $366,053 | $504,900 | $504,900 |
| Operating surplus (EBITDA) | $12,957 | $104,260 | $104,260 |
| Profit before income tax | −$16,789 | $75,477 | $76,542 |
| Principal + interest | $23,787 | $23,787 | $23,787 |
| Change in cash after debt | −$12,703 | $80,472 | $80,472 |
| Year-end cash | $32,297 | $112,770 | $193,242 |
| Year-end loan balance | $140,799 | $130,634 | $119,405 |
Read the result before adopting the forecast
The base first-year operating result (EBITDA) is $12,957. The lowest modeled cash balance is $14,069, compared with the opening reserve of $45,000. The difference, $30,930.90, shows reserve consumed by the lowest point in the modeled horizon; it is not an additional equipment expense or a loan repayment estimate.
Compare an asset-only purchase with the leasehold, deposits and opening cash request. A funded machine does not cover slow morning trade or landlord works.
Owner compensation is included. The same opening funding applies across the published demand scenarios. A higher installed procurement cost needs more funding or less opening cash and a rerun of the forecast. Compare the monthly cash exhibit and scenario period rather than inferring opening-year affordability from a mature-month margin.
Observed industry evidence
What the SBA records show
In the broader category’s FY2012–FY2016 cohort, 184 of 1,865 records with a paid-in-full or charged-off status were charged off (9.9%). A further 89 disbursed records have EXEMPT status and are outside that denominator.
This is a selected historical loan-outcome measure. It does not report operating margins or the chance of business failure. Use the cash scenarios below to test this specific project.
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Source: SBA 7(a) and 504 FOIA files, snapshot 30 June 2026. Recomputed from original records on 1 October 2026. FY2025 is the most recent complete fiscal year in these files. Definitions and exclusions.
See the opening cash trough
View the monthly cash figures
| Month | Lower demand | Base | Higher demand |
|---|---|---|---|
| 1 | $35,394 | $37,846 | $39,318 |
| 2 | $24,588 | $30,425 | $33,927 |
| 3 | $14,819 | $24,387 | $30,128 |
| 4 | $6,088 | $19,733 | $27,919 |
| 5 | −$1,606 | $16,461 | $27,302 |
| 6 | −$8,262 | $14,574 | $28,275 |
| 7 | −$13,881 | $14,069 | $30,839 |
| 8 | −$18,462 | $14,948 | $34,994 |
| 9 | −$22,006 | $17,210 | $40,740 |
| 10 | −$24,512 | $20,856 | $48,077 |
| 11 | −$25,980 | $25,885 | $57,004 |
| 12 | −$26,411 | $32,297 | $67,523 |
Sources and scope
- Reference-case assumptions and calculation method · Checked 2026-10-01 · Fictional US planning case authored 1 October 2026. Budget allowances, demand, rent, labor, finance and scenarios are assumptions, not market averages.
- SBA — 7(a) loans · Checked 2026-10-01 · United States; permitted uses, lender application process and ability-to-repay requirement. No approval, rate or equity percentage is promised.
- SBA — 504 loans · Checked 2026-10-01 · United States; qualifying long-term fixed assets; working capital and inventory excluded.
- WebstaurantStore — Appia Life Compact two-group machine · Checked 2026-10-01 · Listed machine price checked 1 October 2026. Required service-plan selection and site work are separate; this is not a complete equipment quotation.
- FDA — How to Start a Food Business · Checked 2026-10-01 · US retail food businesses: state/local oversight and site-specific licenses; not a local permit checklist.