Theoretical and actual food cost: understanding the difference.

For each recipe, multiply ingredient quantities by their reference prices, then calculate the cost per portion. Multiply that cost by portions sold. The sum is the theoretical food cost of sales within the scope.

Consider 200 portions with a food cost of €3.50, totaling €700. A second recipe, sold 100 times at a cost of €2.00, represents €200. The theoretical total is therefore €900. The selected prices and recipes must correspond to the period analyzed.

The calculationTheoretical cost = (200 × €3.50) + (100 × €2.00) = €900

In a simplified case with no transfers or other movements, valued consumption equals opening inventory plus material receipts during the period, minus closing inventory. This distinguishes materials received from those still available.

With €500 of opening inventory, €1,200 of receipts and €650 of closing inventory, the estimate is €1,050. This example uses tax-exclusive values in a single currency and a consistent valuation method. No tax rate or market price is assumed.

The calculationValued consumption = €500 + €1,200 − €650 = €1,050

The difference between valued consumption of €1,050 and the theoretical reference of €900 is €150. With tax-exclusive revenue of €3,000 in the same scope, the respective ratios are 35% and 30%.

The difference is 5 percentage points. It does not, on its own, prove €150 of waste. Before drawing conclusions, examine sales coverage, inventory movements and the prices used in both calculations.

Several situations can explain a variance: portions that differ from the recipe, preparation waste, staff meals, complimentary items, price changes or inventory errors. A delivery or transfer recorded in the wrong period also changes the picture.

Group checks by quantity, price, movement and scope. Waste already reflected in inventory changes must not be added to the overall calculation a second time. It helps explain consumption, not double it.

Across a network, use comparable periods, units and valuation methods. Document inter-site transfers and their dates. At location level, transfers in and out must be included; at consolidated level, internal movements cancel out.

Also consider sales mix. Two restaurants selling different recipes can have different ratios without either following its specifications less accurately. Comparing actual consumption with its own theoretical reference preserves this context.

Food cost describes raw materials within the scope studied. It does not include all restaurant expenses. Deducting it from revenue gives a balance after materials, which must not be presented as net profit.

Praedixa connects recipe specifications, portion costs and margin tracking. To analyze a variance, start with the restaurant’s data and definitions.