What is the fundamental measurement Chipotle uses to manage food cost?

• A. Variance (You want to get your variance as close to zero as possible)
• B. Labor productivity
• C. Customer traffic
• D. Inventory turnover

Answer: (A)

The main idea is to measure how closely actual ingredient usage and spending match the plan. That’s done with variance—the difference between what actually happened and what the standard cost says should have happened for food. Chipotle sets standard recipe costs based on ingredients, yields, and current prices, then tracks daily actual usage and cost to compute the variance. Keeping this variance near zero signals that portions, waste, and purchasing align with the plan, so food costs are controlled. When the variance drifts, it points to issues like over-portioning, waste, prep mistakes, theft, or supplier price changes, and it prompts targeted fixes such as coaching on portions, better waste control, or adjustments to buying. In contrast, labor productivity focuses on people costs, customer traffic relates to demand trends, and inventory turnover describes how quickly stock moves—useful for other aims but not the direct daily measure of food cost management.