Actual vs. Theoretical Variance Reports
Overview
In the restaurant business, maintaining control over food costs is a way of ensuring operational efficiency and profitability. Restaurant owners or operators, and store managers should consider food cost and quantity as a performance metric, or Key Performance Indicator (KPI). This KPI can be measured or tracked as actual vs. theoretical variance in food costs and quantity.
Actual vs. Theoretical Variance Reports are included when you install the Shelf-to-Sheet Count SuiteApp. The Dollar Variance Report calculates the variance between actual and theoretical costs or usage of food ingredients in monetary value. The Unit Variance Report calculates the variance between actual and theoretical costs or usage of food ingredients in terms of quantity. Both reports are automatically generated by the system.
The variance reports are based on a comparison of two Shelf-to-Sheet Count records, over a period between a Start Count Date and End Count Date. Therefore, at least two approved Shelf-to-Sheet Count records must exist for the system to automatically generate the Dollar Variance and Unit Variance reports.
The variance reports list food ingredients, referenced from the Shelf-to-Sheet Count records, with the total cost, amount sold, and quantities, referenced from inventories (including adjustments) and transactions (sales orders, invoices, cash sales, returns, and others) posted for each food ingredient within a certain period.
The theoretical cost or usage per food ingredient in the inventory assumes perfect portions, with no waste, shrinkage, errors or theft.
On the other hand, the actual cost or usage includes the following factors that may cause variance:
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Waste, such food or ingredients dropped on the floor or spoiled from over-ordering or over-preparing;
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Allowed Waste, such as complimentary food and drinks for staff, in meetings and events;
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Errors or mistakes in receiving ingredients (wrong pack size), counting inventory, setting up menus (recipes are incorrect), errors at POS;
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Over-portioning or under-portioning; or
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Theft or unpaid food items or products.
In an ideal scenario, the food cost and quantity in your purchase and sales records (theoretical) should match or have little to zero difference or variance from the food cost and quantity you have on hand in the inventory (actual). A zero variance, though very rare in the real world, means that there is no waste or shrinkage of food ingredients, perfect portioning of ingredients per menu item or order, and complete efficiency in inventory, preparation and sales. However, if the gap or variance between actual and theoretical food cost and quantity is large or significant, there must be some losses or wastage of food ingredients in storing or preparing them, errors in inventory, improper portioning, or theft. In this case, you should consider the food ingredients with large variance and then analyze the transactions and records of those ingredients to identify the causes of variance.
For more information, see Viewing the Dollar Variance Report and Viewing the Unit Variance Report.
Requirements for Actual vs. Theoretical Variance Reports
Before the system can generate the Actual vs. Theoretical reports, you must meet the following requirements:
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You are using OneWorld accounts, with subsidiaries and locations set up as necessary. Preferably, product categories, created from classes in NetSuite, are also defined and set up.
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You are using the SuiteSuccess R & H edition and must have installed the Shelf-to-Sheet Count SuiteApp.
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Multiple currencies, locations, and Unit of Measure are enabled.
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Using the Shelf-to-Sheet Count SuiteApp, you must have at least two completed and approved Shelf-to-Sheet Count records for a given subsidiary and location.
After meeting these requirements, the system is ready to generate the Actual vs. Theoretical variance reports.
Limitations of Actual vs. Theoretical Variance Reports
The following are the limitations of the Actual vs. Theoretical variance reports:
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The Actual vs. Theoretical variance reports come with the Shelf-to-Sheet Count SuiteApp, which works best with the SuiteSuccess Restaurants and Hospitality (R & H) edition of NetSuite.
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The variance reports support only U.S. currency. Multicurrency is not supported yet.
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Lot Tracking and Serialized inventory item types are not supported by Shelf-to-Sheet Count SuiteApp and the Actual vs. Theoretical variance reports.
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For Assemblies, ingredients that are consumed as part of Building the Assemblies, or sold as apart of Sales Order, will not be included in generation of the Actual vs Theoretical variance reports.
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The reports only show inventory items , but they do not display kit items.
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Only 25 rows can be displayed on a page of a report. You must use pagination dropdown to check next list of items.
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The reports only reference NetSuite standard transactions (invoice for sales, etc.) and support standard NetSuite forms.
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The reports can correctly calculate values in sales related columns if both menu items (kit package) and its ingredients (inventory item) are in the same product category.