Theoretical vs actual cost: why a perfect recipe costing can still lose money
You can have impeccable recipe costings and still lose money if nobody respects what's on them. The document doesn't control the business on its own.
By
Javier Porras3 min read
If you already calculated cost per portion in the step-by-step recipe costing and food cost and margin, what's left is the acid test: what the paper says versus what happens in the kitchen.
Theoretical cost and actual cost
Theoretical cost
What should happen.
If portion weights are respected, there is no unnecessary waste, product isn't thrown away, there are no mistakes, no expiries, and prices are up to date.
Actual cost
What actually happens.
The cook who adds a bit more. The box that arrives with fewer units. The sauce made in excess. The product that expires. The waste nobody records.
The formula for calculating actual product cost over a period is:
Comparing theoretical cost with actual cost lets you spot variances caused by: portions that are too large, overproduction, unrecorded waste, expiries, uncontrolled comps, kitchen errors, theft, inventory differences and supplier prices that haven't been updated.
You can have impeccable recipe costings and still lose money if nobody respects what's on them. They have to be used.
The mistakes that make your recipe costing lie
Calculating «more or less»
If the weight is approximate, the cost will be too. Use scales, measuring jugs and clear recipe cards.
Not updating prices
Your supplier can raise the price of meat, oil or dairy while you keep selling at the same price. Check the delivery notes.
Ignoring waste
A kilo purchased doesn't always equal a kilo usable. Calculate the real yield of your products.
Forgetting garnishes and small consumables
Bread, sauces, oil, seasonings, garnishes and packaging also cost money.
Using the price including VAT
Margin should be calculated on net sales, excluding VAT.
Thinking a good food cost guarantees profitability
A dish can have an attractive percentage and leave few euros, or need too much labour and time.
Building the costing and filing it in a drawer
An outdated recipe costing is decoration. It's a living management tool, not a task you do once.
When theoretical and actual control start to line up, you can use those figures to design a more profitable menu.
Want to start controlling what each dish really costs?
You have two options now.
Option 1
Start free with our recipe-costing spreadsheet
We prepared a simple template so you can start calculating dish cost, review margins, and stop pricing by eye.
You can open the spreadsheet in view-only mode to see how it works.
If you want a fully free editable copy, get in touch and we will send it so you can use it in your business.
Option 2
Do it more easily with Tipi
If you do not want to rely on spreadsheets or update every price by hand, you can do it directly in Tipi.
Centralise recipes, recipe costings, purchases, delivery notes and supplier prices to know what each dish costs and spot increases that are eating your margin.
You can keep calculating by eye and hope the numbers add up.
Or you can start today knowing how much you really earn every time a dish leaves the kitchen.