Restaurant Controllable vs. Uncontrollable Costs: What Every Owner Needs to Know
Running a successful restaurant isn’t just about crafting the perfect menu or providing five-star service—it also demands a solid understanding of restaurant accounting. One of the most essential distinctions every restaurant owner and manager must grasp is the difference between controllable and uncontrollable costs. This knowledge forms the foundation of effective financial management and long-term profitability.
What Are Controllable Costs?
Controllable costs are expenses that restaurant owners or managers have the power to influence or adjust on a regular basis. These are the day-to-day operating costs that can be managed through careful planning, operational efficiency, and strategic decision-making.
Common examples of controllable costs include:
Food and beverage costs: Adjusted by managing inventory, portion control, and supplier contracts.
Labor costs: Including hourly wages, staff scheduling, and overtime management.
Supplies: Such as cleaning products, packaging, and kitchen tools.
Utilities: Like electricity and water, which can be partially controlled through energy-efficient practices.
Marketing and advertising: Promotions, digital ads, and print materials that can be scaled up or down.
Monitoring and optimizing these expenses can directly improve your restaurant's profitability.
What Are Uncontrollable Costs?
Uncontrollable costs, on the other hand, are expenses that are typically fixed or cannot be easily changed in the short term. While they still impact your bottom line, you have little to no direct control over them in your day-to-day operations.
Examples of uncontrollable costs include:
Rent or lease payments
Depreciation of equipment
Property taxes
Franchise or licensing fees
Insurance premiums
Understanding these costs helps you anticipate cash flow needs, but they do not fluctuate significantly based on your operational decisions.
Why You Must Track Controllable Profits Weekly
Weekly tracking of controllable profit—which is your gross profit minus controllable expenses—provides a timely snapshot of your restaurant’s performance. Unlike traditional monthly or quarterly reviews, weekly monitoring allows for quicker responses to cost overruns or revenue dips.
Here’s why weekly tracking matters:
Faster decision-making: Catch food cost spikes or labor inefficiencies before they spiral.
Improved cash flow management: Helps ensure you’re never blindsided by sudden dips in profitability.
Goal alignment: Keep your team focused on hitting weekly cost and revenue targets.
Profit maximization: Regular insights help you refine menus, optimize schedules, and adjust pricing strategies.
When restaurant owners understand and proactively manage their controllable profits, they are better positioned to weather slow seasons, invest in growth, and maintain long-term financial health.
Work With a Restaurant Accountant Who Understands Your Business
Restaurant accounting is complex, but you don’t have to navigate it alone. At The Kitchen CPAs, we specialize in restaurant accounting and tax services tailored to the unique needs of foodservice businesses. Whether you're looking to improve your cost tracking, enhance profitability, or streamline your tax filings, our team of dedicated restaurant accountants is here to help.
Take control of your numbers and boost your bottom line. Contact The Kitchen CPAs today to schedule your consultation.