Inventory Control
How do you calculate restaurant inventory turnover?
Direct answer
Restaurant inventory turnover equals cost of goods sold divided by average inventory for the period. Average inventory is usually beginning inventory plus ending inventory, divided by two.
Key points
- Inventory Turnover = Cost of Goods Sold / Average Inventory.
- Use the same cost basis and period for cost of goods sold and inventory.
- Very slow turnover can signal overbuying or dead stock; very fast turnover can increase stockout risk.
What to do next
- 1Calculate average inventory from beginning and ending inventory values.
- 2Divide cost of goods sold for the period by that average inventory.
- 3Compare turnover by category and against your own prior periods, then inspect slow-moving items.