Your food cost variance is the gap between what your food should have cost (ideal) and what it actually cost (actual), expressed as a percentage or pound value. To calculate it, subtract your ideal food cost from your actual food cost for the same period. Anything above roughly 1–2% variance means you're losing money to waste, theft, over-portioning, or poor pricing — and for a small UK restaurant, that gap can quietly wipe out your margin.
Here's exactly how to work it out.
Actual food cost is what really left your kitchen, measured from stock counts and purchases:
> Actual food cost = Opening stock + Purchases − Closing stock
Ideal (theoretical) food cost is what your sales should have consumed, based on your recipes:
> Ideal food cost = Sum of (recipe cost per dish × number of that dish sold)
The variance is simply the difference between the two.
Pick a consistent window — weekly is best for a small restaurant because it catches problems fast. Monthly hides too much. Always count stock at the same time (e.g. Sunday night close) so purchases and sales line up with the same period.
Do a physical stock take at the start and end of the week. Use your supplier invoices for everything purchased in between.
Worked example (one week):
Actual food cost = £3,200 + £4,600 − £3,050 = £4,750
Now express it as a percentage of food sales. Say your food sales (ex-VAT) were £15,000:
Actual food cost % = £4,750 ÷ £15,000 = 31.7%
> UK tip: Always strip VAT out of your sales figure before calculating percentages. If your till reports gross sales, divide food sales by 1.20 to get the ex-VAT figure. Costing on gross sales will flatter your numbers and mislead you.
This is where most small restaurants fall down — you need an accurate recipe cost for every dish you sell.
For each menu item, cost the recipe by multiplying each ingredient by its current price. For example, a burger:
| Ingredient | Quantity | Cost |
|---|---|---|
| Beef patty (170g) | 0.17 kg | £1.36 |
| Brioche bun | 1 | £0.35 |
| Cheese slice | 1 | £0.18 |
| Lettuce, tomato, sauce | portion | £0.30 |
| Fries (150g) | 0.15 kg | £0.22 |
| Total plate cost | | £2.41 |
If you sold 320 burgers that week, ideal cost for burgers = 320 × £2.41 = £771.20.
Repeat for every dish, then add them all together. Say your full menu's ideal food cost across everything sold came to £4,350.
Ideal food cost % = £4,350 ÷ £15,000 = 29.0%
As a percentage:
Variance = Actual % − Ideal % = 31.7% − 29.0% = 2.7%
As a pound value:
Variance = £4,750 − £4,350 = £400
That £400 in one week is £20,800 a year of profit leaking out of your kitchen. For a small restaurant on tight margins, that's often the difference between viable and struggling.
A small variance is always expected — trim waste, spillage, and the occasional comped dish are unavoidable. It's the trend that matters. One bad week can be noise; three in a row is a problem.
When your actual cost exceeds ideal, the money is escaping through one of these:
Don't try to fix everything at once. Rank your dishes by sales volume and margin, then focus on the high-runners first — a 20p portioning error on your best-selling dish costs more than a big error on something you sell twice a week.
Practical checks:
1. Weigh a sample of plated dishes during service against the spec.
2. Spot-check yields on your most expensive proteins.
3. Reconcile staff meals and comps — are they being logged?
4. Re-cost your top 10 sellers with today's invoice prices.
5. Compare supplier prices week to week for creep.
Variance is only useful over time. Log your ideal %, actual %, and variance every week in a simple table. When the number spikes, you'll know which week — and therefore which staff, supplier delivery, or menu change — caused it. Without a running record, you're just guessing after the fact.
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The hard part isn't the variance formula — it's keeping accurate, up-to-date recipe costs so your "ideal" number is real. That's exactly the work that turns a food cost calculation from a guess into a decision.
If you want to sense-check a single dish or menu quickly, try the free food cost calculator. And if you'd rather have your recipes, yields, and portion maths costed automatically — with proper batch scaling built in — take a look at the ready-made Excel costing templates in the PrepSheet shop. They'll save you from rebuilding a spreadsheet from scratch every time your supplier prices change.