The formula
Average inventory = (Beginning inventory + Ending inventory) / 2
Inventory turnover = Cost of goods used / Average inventory
Days of stock on hand = Days in the period / Inventory turnover
Turnover answers how often the storeroom empties and refills. Its companion, days on hand, answers the same question in the unit a kitchen actually thinks in: how long would today’s shelves last? The two always move together. Five turns in a 30 day month is six days of stock; two turns is fifteen days, and fifteen days is longer than the useful life of most of what a restaurant buys.
The average matters more than either stock count on its own. A single count can be flattered by a delivery that landed the day before, or a storeroom cleared for the count. Averaging the opening and closing values smooths the worst of that timing noise, which is why this calculator asks for both.
How to use it, with an example
- Use your latest completed period, usually a month, and pull the cost of goods used for it.
- Take beginning and ending inventory values at cost, from actual counts, valued the same way both times.
- Enter the days in the period so the result can be expressed as days of stock on hand.
- Run the whole inventory first, then repeat by category. Food, beverage and dry goods turn at very different speeds, and one blended number hides that.
Worked example: A restaurant uses $48,000 of stock in a 30 day month. It opened with $9,000 on hand and closed with $11,000, so average inventory is $10,000. Turnover is $48,000 / $10,000 = 4.8 times in the month, and days on hand is 30 / 4.8 = 6.3 days. Usage runs at $1,600 a day. That sits in the healthy zone: fresh stock with about a week of cover. The calculator above is prefilled with these numbers.
Turnover is only as good as the counts behind it, and counts are only as good as the routine that produces them. Odoo for Restaurants keeps stock moving in real time as deliveries arrive and dishes sell through the Odoo Inventory module, so the period-end value is a report rather than a rescue mission, and the counting discipline itself is covered in restaurant inventory management tips.
Common mistakes
- Using purchases instead of usage. Goods bought are not goods used. A big delivery inflates the numerator and flatters turnover, while the stock quietly builds. Usage, opening stock plus purchases minus closing stock, is the only honest numerator.
- Valuing stock at selling price. Inventory is held at cost. Valuing it at menu prices triples the apparent stock, crushes the turnover figure and makes a healthy storeroom look bloated.
- Counting one blended number. Wine, spirits and dry goods legitimately sit for weeks; fresh protein should not. Blended, the slow stock hides the fast problems. Value accuracy matters too: sloppy counts make the whole metric fiction, as how to do Odoo inventory adjustment and stock valuation works through.
- Chasing maximum turnover. Every extra turn trims cover. Restaurants that brag about turning fresh stock eight times a month are usually one missed delivery away from an 86’d menu. The target is the healthy zone, not the record.
- Counting once a year. Turnover measured annually is history. Measured monthly, it catches the slow build of dead stock while it is still a purchasing conversation rather than a write-off.
- Ignoring what the bin is doing. Falling turnover with rising purchases often means waste is being stored instead of recorded. The stock is not slow, it is leaving through the back in bags nobody weighed.
FAQs
What is a good inventory turnover for a restaurant?
For food, most restaurants turn stock four to eight times a month, which is roughly four to seven days on hand for fresh categories. Beverage and dry goods run slower and that is fine. Judge each category against its own shelf life, not against one house number.
Is higher turnover always better?
No. Beyond a point, higher turnover means thinner cover, more deliveries, more receiving time and more stockouts. The best operators sit in a healthy middle: fresh stock, about a week of cover on perishables, and ordering effort spent on value, not on daily emergency runs.
What is the difference between turnover and days of stock on hand?
They are the same fact in two units. Turnover counts how many times stock cycled in the period; days on hand says how long current stock lasts at current usage. Days on hand is usually the better management number, because it can be compared directly with shelf life and delivery lead times.
Should I include alcohol in food turnover?
Separately. Alcohol turns far more slowly than food, stores safely for months and carries different margins and theft risks. Blend it into the food figure and both numbers become useless. Run food, beverage and dry goods as three calculations.
Why did my turnover fall even though sales rose?
Because stock grew faster than usage. Rising sales with falling turnover usually means purchasing is running ahead of the menu: bigger orders, new items stocked speculatively, or pack sizes creeping up. The sales are real; so is the cash parked behind them.
How often should I count inventory?
Monthly at minimum for the full count that feeds this calculator, weekly for your top value items. The count makes the ending value real; without it, turnover is arithmetic on estimates.
