In this article you will find:
If you would like to learn more on common investigation scenarios, check out this article
June 2025- First off, how do the columns in the new report compare to those in the previous version?
Why Tracking Variance Between Actual & Theoretical Matters (And How It Boosts Profits)
Find Hidden Profit Leaks
Every point of variance between what you should have used (theoretical) and what you actually used is either waste, theft, over-portioning, or a training issue. Even a 2% variance can mean thousands of dollars in lost profit every month.
Turn Guesswork Into Actionable Data
Without tracking variance, you’re flying blind. With it, you know exactly which ingredients or menu items are costing you more than they should- and why. You can’t fix what you don’t measure.
Train Smarter, Not Harder
Variance reports show where your team might need support- maybe they’re over-portioning the chicken breast or not following drink recipes. Use the data to coach, not punish.
Optimize Your Recipes
Seeing consistent overuse on certain items? That might be a signal that your recipes, portion sizes, or plating standards need to change. This makes your menu more efficient and more profitable.
Reduce Waste Without Killing Creativity
Chefs and bartenders still get room to innovate- but within a framework that protects margins. Variance tracking keeps quality high and costs in line.
Protect Your Bottom Line
You work too hard to let cash slip away unnoticed. Tight variance control means tighter margins, better bonuses, and more money to reinvest in the team and the guest experience.
📌 If you’re not tracking actual vs. theoretical, you’re leaving money on the table- plain and simple. It’s not about micromanaging; it’s about making smarter, faster, more profitable decisions every day.
What is a Stock Reconciliation Report
The Reconciliation Report compares what your team actually used (aka Actual) with what your system expected based on sales and recipes (aka Theoretical). This helps you track stock accuracy, spot issues early, and understand the cost of any discrepancies (also known as variances).
Each column in the report plays a specific role. Below, you’ll find a breakdown of every column - including what it means, how it’s calculated, and how it applies in a hospitality setting.
Example: Variance at a Multi-Location Restaurant
You notice a high Variance Quantity in draft beer.
The Variance Value shows a 400 loss, which impacts your bottom line
Checking the Closing Quantity, you confirm your stock count is correct.
Checking the Deliveries, you confirm your stock count is correct.
Looking at Waste Quantity, you find excess spillage recorded.
You investigate and find that bartenders are throwing away bottles when there is still a little product inside.
You implement training and portion control measures to fix the issue.
This report helps you reduce waste, improve profit margins, and identify operational inefficiencies.
Variance
Variance Quantity
Definition:
The difference between what was sold (based on POS data) and what was recorded through stock movements (like deliveries, waste, and transfers).
Formula:
Sold quantity – (Opening stock + Deliveries + Transfers in + Batches created – Closing stock – Transfers out – Waste – Used in batches).
Use Case:
This column helps you identify if you’re using more (or less) of an item than expected. A large variance often points to issues like incorrect portioning, missing waste logs, or stock counting errors.
Variance Value
Definition:
The difference in value between what was sold and what was used based on stock movements.
Formula:
Sold value – (Opening stock value – Closing stock value + Delivered value + (Transfers in – Transfers out) × Current price – Waste value + (Batches created – Used in batches) × Current price).
Use Case:
This lets you see how much variance is costing your business. For high-cost ingredients, even small variances can have a big financial impact.
Common Question: Why do some items show 0 Variance Quantity but a non-zero Variance Value ?
This usually happens due to price fluctuations during the stock period. Here’s how:
Your opening stock is valued using the price from your main supplier.
If you purchase more of the same item during the week at a higher or lower price, the average value of that item changes.
Even if the item’s quantity balances perfectly, this price difference affects the total stock value- creating a variance in value, but not quantity.
This kind of variance is important for understanding cost control — especially if you rely on multiple suppliers or see frequent price changes. Keep an eye on these shifts to make sure they align with what you’re being charged
Actual
Opening Qty
Definition:
The starting inventory for the reporting period.
Deliveries
Definition:
The quantity of stock received by suppliers during the reporting period. Ensure invoices for all deliveries have been processed.
Net Transferred Qty
Definition:
The net quantity moved between locations during the reporting period. Transfers must be completed at both the sending and receiving locations for the movement to register.
Formula:
Transferred in – Transferred out
Closing Quantity
Definition:
The remaining inventory counted at the end of the period
Used Qty
Definition:
The actual quantity of stock used, based on all inputs and outputs during the period.
Formula:
Opening count - Closing count + Deliveries + Transfers – Waste + Batch balance
Use Case:
This represents what physically happened, regardless of recipes or sales.
Opening Value
Definition:
Opening inventory value for the period, reflecting the average price of previous period deliveries.
Formula:
Opening count × Price (at time of closing count)
Received Value
Definition:
The total value of items received during this period. Calculated based on average price of deliveries during period.
Formula:
Delivered qty × Price
CPU Received Value
Definition:
Only applicable to CPU locations. Tracks deliveries from CPU suppliers. Price reflects the amount at the time of ordering or delivery note adjustments.
Formula:
Delivered qty × Price
Transferred Value
Definition:
The net accepted value of items moved between locations during the reporting period
Formula:
(Transferred in quantity – Transferred out quantity) × Current price.
Closing Value
Definition:
The inventory value at period close, calculated based on the current price of remaining stock.
Formula:
Closing qty × Price
Used Value
Definition:
Tracks the value of inventory consumed.
Formula:
Opening Value + Delivered Value + Transferred balance – Waste Value + Batch Balance value – Closing Value
Theoretical
Sales Qty
Definition:
The expected usage based on recipes and sales logged in your POS system.
Use Case:
This shows what should have been used if every recipe was followed exactly and sales were logged correctly.
Sales Value
Definition:
The sales value of items sold through POS, covering both batches and supplied items.
Batch Value
Definition:
Reflects the total cost of batches created and logged by users, calculated using the current item price. Whether batches are created manually or automatically depends on your location’s setup.
Use Case:
For example, flour used in pizza dough. If this isn’t tracked properly, base ingredient variances will appear higher than expected.
Formula:
Batch balance × Current price
Batch Balance
Definition:
Represents difference between batches created and the quantity of a batch that has been used as an ingredient in other batches.
Formula:
Batch created – Used as batch ingredient
Accounted Waste
Waste Qty
Definition:
The waste quantity that has been logged for during the reporting period.
Use Case:
Ensure your team logs waste consistently. Untracked waste inflates your variance and impacts gross profit.
Waste Value
Definition:
The monetary value of waste recorded during the reporting period.
Formula:
Waste qty × Current price
Item Information
Item
Definition:
The name of the stock item being tracked.
This is configured in your inventory and matches the name used during counting, purchasing, and recipes.
Category
Definition:
The category assigned to the item, such as “Dairy,” “Meat,” or “Dry Goods.”
Useful for filtering the report and identifying trends in specific areas.
📖 How to create and edit Categories
Type
Definition:
Indicates if the item is a Food, Beverage or Miscellaneous.
Unit
Definition:
The unit of measurement used for the item (e.g., kg, L, each).
This is critical for consistent counts and accurate costing.
Other
Is Estimated
What it means: Indicates whether the variance is based on an estimate rather than exact data.
How it’s calculated: True if actual usage is inferred rather than directly counted.
How to use it:
Estimated values provide insight when direct tracking isn’t available, but manual verification may be needed.
TOP TIPs
Want to update the stock category? Check out this article.
If you would like to learn more on common investigation scenarios, check out this article