How to monitor food profit margins with a key item report

 In 1. David Scott Peters, Food Costs, Operations, The Numbers

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 items, specials 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, and I’ve got one more tool that will help reduce food costs even more. Stay tuned because next week I’ll share another vital tool for monitoring food costs – the waste sheet.

David S. Peters
Aside from being the founder of TheRestaurantExpert.com and serving as a Member coach, David is also a dynamic and engaging speaker. He is available to present in large group settings targeting independent restaurant owners, whether they own one location or a multi-unit chain.
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