Inventory turnover
Also called: inventory turns · stock turn
Inventory turnover is COGS divided by average inventory value — how many times you sell through your stock in a period. Restaurant food inventory should generally turn 4–8 times a month; a lower number means cash and shelf life are both sitting still.
Formula
Turnover = COGS for the period ÷ ((Opening inventory + Closing inventory) ÷ 2)
Worked example · A month at a casual full-service restaurant
- COGS for the month
- $32,100
- Opening inventory
- $8,400
- Closing inventory
- $7,900
- Average inventory
- $8,150
- Monthly turnover
- 3.9×
Slightly low. Roughly $8,000 is tied up in stock at any moment — and every extra day on the shelf is another day of spoilage risk on the perishable half of it.
| Category | Target turns/month | Note |
|---|---|---|
| Produce | 12–20 | Should be near-daily; anything slower is spoilage waiting to happen |
| Dairy | 8–12 | Short shelf life, steady usage |
| Fresh protein | 6–10 | Balance against price breaks on larger orders |
| Frozen | 2–4 | Slower is acceptable; watch freezer burn, not spoilage |
| Dry goods | 2–4 | Cheap to hold, so optimise for order frequency instead |
| Alcohol | 1–3 | Wine especially — turnover is the wrong metric for a cellar |
Related terms
Days on hand
How many days of normal usage your current stock represents.
COGS (cost of goods sold)
The cost of the food and beverage actually consumed in a period, computed from inventory rather than from purchases.
Par level
The quantity of an item you want on hand at the start of each order cycle — enough to cover demand plus a safety buffer.
Spoilage
Product lost to age, temperature or damage before it could be sold.
Usage rate
How much of an item you consume per day or per cover — the input behind every par level and order.