Is the VAT flat rate scheme worth it for a small café?

Your understanding is right — under the Flat Rate Scheme you pay HMRC a fixed percentage of your VAT-inclusive turnover instead of accounting for VAT on each sale and purchase, and you keep the difference between that and the VAT you charge. The current flat rate for catering services, including cafés, is 12.5%, with a 1% discount in your first year of being VAT registered, although there's a higher 16.5% rate if HMRC classes you as a 'limited cost business'. Whether it pays depends on your cost pattern: if you buy a lot of standard-rated ingredients or equipment, staying on standard VAT accounting and reclaiming input VAT can work out better, whereas businesses with low costs often benefit from the simplicity of the flat rate. You're not locked in — you can leave the scheme at any time by telling HMRC, although you must then wait 12 months before rejoining. It's worth running the numbers for a typical quarter before deciding, and remember you must leave the scheme if your turnover grows beyond the eligibility limit.