Variance

What variance actually means

Variance is the gap between what you should have used and what you actually used. If your POS says you sold 40 Tito’s shots (60 oz, or two bottles worth) but your count shows three bottles came off the shelf, you have 30 oz of variance. That extra bottle went somewhere that was not a sale.

Variance is the single best leading indicator of shrinkage. Pour cost tells you there is a problem. Variance tells you which bottle.

How it is used on the floor

Every variance report compares theoretical usage (from POS sales multiplied by recipe specs) to actual usage (from the count). The difference is variance, expressed in ounces, bottles, or dollars.

Managers review variance reports weekly. A healthy bar runs under 2 percent variance on total liquor. Over 4 percent and there is a real leak. Over 6 percent and you are bleeding.

The math

Variance = Actual usage - Theoretical usage

Example: POS says you sold 85 shots of Jameson at 1.5 oz each, for 127.5 oz theoretical. The count says 180 oz left the shelf. Variance is 52.5 oz, or roughly two bottles, at $30 each equals $60 loss on that SKU alone.

A good variance report flags which SKUs are the worst offenders so you are not chasing every bottle. The top five usually explain 80 percent of the problem.

What causes variance

In rough order of frequency:

1. Over-pouring (unintentional)
2. Spills and waste not logged
3. Comps not rung in
4. Recipe specs that do not match reality
5. Theft (straight drinks, drinks for friends, cash-not-rung)
6. Receiving errors (short shipments)
7. POS miskeys (wrong button pressed)

Variance itself does not tell you which cause. It tells you where to look.

Common mistakes

Only reviewing variance at month end (too late). Chasing every bottle instead of the top offenders. Blaming theft before checking specs. Using theoretical from outdated recipes. Not logging waste and spills, which inflates apparent variance.

How PourIQ handles it

PourIQ calculates variance automatically after every count and ranks SKUs by dollar impact. You see the top five problem bottles, the ounces missing, and the shifts where usage spiked. The variance report goes from a monthly nightmare to a 60-second review.