What is Variance in the Restaurant Industry?

Variance means simply the difference between what your restaurant should have and what it actually has. Typically, this applies to cash, inventory, and sales. Small differences can often indicate some operation-related issues.

In daily operations, variance always comes up when the data doesn’t match. Let's take an example: your POS reports show $1,000 in sales, but the cash drawer has $950. The gap of $50 is a cash variance. This applies to inventory also. If your kitchen display system shows you have 20 steaks left, but the inventory count is 15, then the difference is known as inventory variance.

For owners and managers of restaurant businesses in the US. Variance is the most important measurement used for control. Variance measures problems that occur due to errors by staff, theft, waste, or incorrect data entry. If a restaurant doesn't track variance, these types of problems can slowly eat into profits.

Restaurant managers track variance when performing end-of-day counts, during shift changes, or while counting inventory. Modern POS and inventory systems highlight these differences automatically. This helps to make it easier to spot and investigate them quickly.