Costs & margins
Actual vs theoretical food cost: how to find the gap
By RestoGrowth Advisor Editorial Team · Published
Theoretical food cost is what your food should have cost, based on your recipes and what you sold. Actual food cost is what it did cost, based on inventory. The difference is the gap: waste, over-portioning, unrecorded comps, receiving errors and theft. Work it out in dollars every month, and the gap tells you how much money is leaving the kitchen without a sale against it.
The two numbers
Actual food cost comes from inventory, the same way as in our food cost percentage guide:
Theoretical food cost comes from your recipes. For every dish, multiply its plate cost by how many you sold, then add them up:
Then compare them, in percent and in dollars:
Gap in dollars = actual food cost − theoretical food cost
Working out theoretical food cost, step by step
- Cost every recipe at current supplier prices, including garnish, sauces, sides and cooking oil. Use yields: a pound of whole fish doesn’t give a pound of fillet.
- Export the product mix from your POS for the period: each dish and how many sold.
- Multiply and add up. A spreadsheet with one row per dish does this.
- Divide by food sales to get the theoretical food cost percentage.
If costing every dish feels like too much, start with your top 10 sellers. Your product mix report shows what share of food sales they make up, and that is where a gap costs the most.
Worked example
The example restaurant from our food cost guide has $50,000 in food sales for the month. Its recipe costs and product mix put theoretical food cost at 29%.
| Actual: $4,000 + $16,500 − $4,300 | $16,200 (32.4%) |
|---|---|
| Theoretical: $50,000 × 29% | $14,500 (29.0%) |
| Gap | $1,700 a month (3.4 points) |
Over a year that is $20,400 of food bought and not sold. Part of it is easy to find. The kitchen serves about 600 protein plates a week, and checks show they are going out half an ounce heavy. At $8 a pound, protein costs $0.50 an ounce:
| 600 plates × 0.5 oz × $0.50 | $150 a week |
|---|---|
| Per month (4.33 weeks) | about $650 |
| Per year | $7,800 |
That one habit is over a third of the gap. The rest is somewhere else on the list below, and that is where to look next.
Work out your food cost gapFree Food Cost Gap Calculator. No sign-up needed.Where the gap comes from
- Portioning: heavy hands on protein, cheese and sauces. Use scales and portion tools.
- Waste: spoilage, over-prepping, dropped food, and dishes sent back. Keep a waste log by the bin.
- Comps and staff meals that aren’t rung in. The food goes out with no sale on the POS.
- Receiving: short deliveries, wrong weights and price differences signed for without checking.
- Recipes not followed: a cook adds an extra garnish or swaps an ingredient.
- Wrong recipe costs: supplier prices rose and the recipe cards weren’t updated, so theoretical is too low.
- Counting errors: missed storage areas, wrong units, different counters.
- Theft at the back door, at receiving or at closing.
The operations checklist covers receiving, storage, prep and waste routines.
How big a gap is normal?
Some gap is normal: no kitchen hits its recipes exactly. We don’t give a target figure here, because we haven’t found one backed by published research. What matters more is:
- The dollars. A 1-point gap on $50,000 of food sales is $500 a month. Decide what is worth chasing.
- The trend. A gap that grows month after month means something changed: a supplier, a cook, a recipe, a habit.
- Sudden jumps. A gap that doubles in one month is often a counting error, or a delivery recorded in the wrong month. Check those first.
Common mistakes
Frequently asked questions
What is theoretical food cost?
It is what your food should have cost based on your recipes and what you sold. Multiply each dish’s plate cost by the number sold, add them up, and divide by food sales for the percentage.
What is the difference between actual and theoretical food cost?
Actual food cost comes from inventory: what was really used. Theoretical food cost comes from recipes: what should have been used. The difference is waste, over-portioning, comps, receiving errors and theft.
How do I calculate food cost variance?
Subtract your theoretical food cost percentage from your actual food cost percentage to get the gap in points, and subtract theoretical dollars from actual dollars to see what it costs you.
What causes a high food cost variance?
Common causes are heavy portions, waste and spoilage, comps and staff meals not rung in, receiving errors, recipes not followed, out-of-date recipe costs, counting mistakes and theft.
How often should I compare actual and theoretical food cost?
At least monthly, when you count inventory. Weekly checks on high-cost items like proteins catch problems sooner.
Sources
- MarginEdge: A restaurant operator’s guide to actual vs. theoretical food costs and usageUsed for: Definitions of actual and theoretical food cost and how to compare them
Examples use an invented example restaurant with round numbers. See how we calculate for the formulas behind our tools, and our editorial policy for how guides are checked. Spotted a mistake? Tell us and we will fix it.