[reitzensteinm]

I think you're confusing gross margins on individual items with the overall profit margins. My understanding - and I'm not especially familiar with the industry - is that markup on individual items sold is high (after all, how much does a cup of coffee cost to make?), but the fixed costs - rent and employees - are also high.

I'm saying the number didn't make sense because you have to look at the marginal cost of servicing those customers. The rent didn't go up because more people were coming in. Extra employees were only necessary if the place was already busy, etc.

[mediaman]

You've got it exactly right. I found data showing that the restaurant/cafe industry (publicly traded ones, anyway) earn gross margins between 25-70%, depending on the company and how they account for COGS versus operating expenses (the real number, measuring only the raw inputs of goods per sale, is toward the higher end of that range).

Retail is all about generating enough volume to cover fixed expenses.