Theoretical food cost is a restaurant’s food cost based only on the food sold during a specific period. As the term suggests, the theoretical food cost is what you should spend on food, according to the cost of all ingredients. It doesn’t factor in accidental waste, employee theft, imperfect portions, or inventory and accounting errors. If you take those elements into account, you’ll know what you are actually spending on food.
Also read: How to calculate food cost
Modern foodservice companies rely on food costing software to make sure calculations are correct and automatically updated.