Variance Analysis

Variance analysis is like financial detective work for your restaurant. It helps you figure out why your actual costs don’t match your expectations or budget, so you can stop money leaks before they turn into profit sinkholes.

What Is Variance Analysis in a Restaurant?

In simple terms, variance analysis means comparing what you planned to spend vs. what you actually spent. The difference between the two is called a variance, and those numbers tell you exactly where your restaurant might be bleeding cash or overperforming.

It’s your early warning system. Without it, you’re essentially guessing what’s working and what’s not.

What Areas Should You Analyze?

The most common categories are:

• Food cost variance: You expected food to be 30% of revenue, but it came in at 35%. Why? Waste, spoilage, theft, or portion creep could be the culprits.

• Labor variance: You scheduled ₹10,000 worth of labor but paid out ₹12,000. What happened? Poor scheduling? Unexpected rush? Overtime?

• Overhead variances: Utility spikes, maintenance costs, or unexpected supply orders can throw your numbers off.

Each variance tells a story—your job is to read between the lines.

How It Helps You Save and Plan

The real magic happens when you consistently track variances. You start spotting patterns, like:

• Food costs always going up when a new chef is onboarded

• Labor being mismanaged on weekends

• Overheads spiking every summer because of A/C overuse

Knowing this helps you prevent future problems rather than reacting to surprises.

Tools That Make It Easier

Modern POS systems and restaurant management software make variance analysis painless. They automatically compare budgeted vs. actual numbers and can even send alerts if something’s off. But the tech is only half the job—you still need to act on what you see.