How to Monitor Food Profit Margins With a Key Item Report

By David Scott Peters

When food costs rise, profit margins sink and restaurant owners must take action. And one vital solution is the key item report.

The key item report is a daily tracking tool that puts the expensive itemsspecials or other items in need of control in a vice grip. This report also helps prevent and identify theft, and most importantly gets the kitchen team to treat these products like precious gold.

At the start of each day or each shift, depending on how much control is needed, take a count of each item that will be tracked. In the beginning this may be five to 10 items. Over time, that number may grow to as many as 40 items or more.

To create your restaurant’s key item report, create six columns with the following headers:

  1. Opening Inventory
  2. Prepared/Purchases
  3. Total Available
  4. Ideal-Ending Inventory
  5. Actual-Ending Inventory
  6. Over/Short Column

To start, list the five to 10 items you want to track down the side as rows. In the first column, put the count you have for each item in the Opening Inventory column in the report.

Upon prep or delivery of these items, write the quantities in the Prepared/Purchases column. Next, total them up and write that number in the Total Available column. This represents the total number of those items available for sale that day or shift.

At the end of the day or shift, run an item or PLU report on the point of sales system (POS) to see how many of each item that you tracked sold. Write that number in the Ideal-Ending Inventory column.

Then take a physical count of each product tracked that you have remaining on hand and document that in the Actual–Ending Inventory column. Finally, compare the Ideal and Actual numbers and write in any discrepancies in the Over/Short column.

Yes, it’s that easy. To really pack a punch, learn how to use the waste sheet to complement the key item report.

David Scott Peters TheRestaurantExpert (1)David Scott Peters is a restaurant expert, speaker, coach and trainer for independent restaurant owners. He is the developer of SMART Systems Pro, an online restaurant management software program helping the independent restaurant owner remain competitive and profitable in an industry boxed in by the big chain restaurants. He is best known as the SMART Systems guy who can walk into any restaurant and find $10,000 in undiscovered cash before he hits the back door… Guaranteed! Learn more at


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