Every restaurant has two food costs. One is what the books say. The other is what really happened. The gap between them is where your money is leaking — and most owners never measure it.
Theoretical food cost (also called "ideal" food cost) is what your recipes say you should have used. If you sold 200 beef burgers at 180g of beef each, the theoretical consumption is exactly 36 kilograms. No waste, no theft, perfect portioning — the mathematical ideal.
Actual food cost is what your stock count says really left the store. If the shelf count shows 42 kilograms of beef disappeared that week, then actual consumption was 42kg against a theoretical 36kg. The 6-kilogram gap — worth real money — is the variance.
The variance is never zero. A healthy kitchen runs 2–5% variance from waste and cooking loss. Anything above that is a signal: mis-portioning, waste, or theft — and it's yours to investigate.
The calculation is simple arithmetic:
Theoretical usage = units sold × recipe quantity per unit, for every menu item. Add them up per ingredient.
Actual usage = opening stock + purchases received − closing stock.
Variance % = (actual − theoretical) ÷ theoretical × 100.
A mid-size restaurant in one week: sold 200 burgers (180g beef each) → theoretical beef usage 36kg. Stock: opened with 10kg, received 38kg from suppliers, closed with 6kg → actual usage 42kg. Variance: 6kg on beef in one week — about 16.7%.
If beef costs $9/kg, that week the gap cost roughly $54 — and it repeats. Over a year, a 16% variance on beef alone exceeds $2,800. Add the same math across chicken, oil, cheese, and rice, and the invisible loss reaches the thousands — before anyone has even checked the suppliers.
The math is easy; the discipline is hard. It requires accurate recipe quantities, disciplined stock counts, and weekly patience to compare — which is why variance tracking is common in chains and rare among independents. The independents are exactly the ones who can least afford the leak.
This is the problem RestoIQ automates: recipes, counts, and sales feed the variance calculation automatically, and the gap appears on your dashboard without anyone doing arithmetic. The owner sees "beef: +16% this week" and can investigate the real cause — a new cook over-portioning, a supplier delivering short, or something worse.