Variance
By Marji · Updated · Sources and editorial policy
Also called: food cost variance
Variance is actual food cost minus theoretical food cost, in dollars and in percentage points of food sales. It measures everything that consumed inventory without producing a sale, plus any error in the recipes and counts behind both numbers. Judge it against your own history, not a borrowed rule of thumb.
Formula
Variance = Actual COGS − Theoretical food cost
Expressed as points: (Variance ÷ Food sales) × 100.
Worked example · Converting points to dollars
- Annual food sales
- $1,850,000
- Variance
- 3.1 percentage points
- Annual leakage
- $57,350
If the gap holds all year, closing half of it is worth $28,675. This is the arithmetic that makes a weekly count worth doing.
Where it hides, and how to tell
| Cause | Typical tell | First move |
|---|---|---|
| Over-portioning | Variance concentrated in the ingredients of one or two high-volume dishes | Weigh 20 random plates; scale on the line |
| Stale recipe costs | Variance appears everywhere at once, evenly | Recost the top 20 dishes against current invoices |
| Comps, voids, staff meals | Variance tracks headcount or a manager's shifts | Pull the comp report by employee |
| Spoilage | Variance concentrated in produce and dairy | Two-week waste log; check par levels |
| Receiving errors | Variance appears the week of a specific delivery | Reconcile invoices against what was actually put away |
| Theft | Persistent, concentrated in high-value items or particular shifts, survives the other fixes | Investigate with evidence once the causes above are ruled out |
Run the numbers
Ideal vs. actual variance calculator
The guide that works it through
Why Is My Food Cost So High? Check Units, Portions and Invoices
Diagnose a high food-cost figure with a decision tree and evidence checklist for dates, pack units, recipe costs, portions, waste and purchasing changes.
Related terms
Theoretical vs. actual food cost
Theoretical is what the recipes say you should have spent; actual is what inventory says you did. The gap is the whole story.
Shrinkage
Inventory that disappears without a corresponding sale — waste, spoilage, error and theft combined.
Spoilage
Product lost to age, temperature or damage before it could be sold.
Comps
Food or drink given away — recovery, staff meals, promotions — real cost with no matching revenue.
Portion control
Keeping served portions equal to specced portions — the difference between the food cost you calculated and the one you get.