Inventory turnover measures how quickly inventory moves through the business:
Inventory turnover = Cost of goods sold ÷ Average inventory value
If annual COGS is 3,000, turnover is 52 — meaning inventory is completely replaced once per week. For a restaurant using fresh, perishable ingredients, weekly turnover of 1–2× (annual 52–104×) is typical and healthy.
Higher turnover means less cash tied up in stock, less spoilage risk, and fresher ingredients. A restaurant turning inventory twice per week (3,000/week in COGS) has $1,500 less cash locked in the walk-in cooler than one turning it once per week.
Lower turnover means more cash tied up, higher spoilage risk, and potentially stale or expired product. A turnover rate below 1× per week for perishable goods signals over-ordering — the business is buying more than it can sell before items expire.
Inventory turnover varies by item type: proteins and produce should turn multiple times per week; dry goods and paper supplies might turn monthly. Tracking turnover by category (not just overall) reveals which items are moving and which are sitting. Items with very low turnover are candidates for menu removal, par level reduction, or order frequency adjustment.
See Food Costing and Waste Reduction and Weekly KPIs and Business Metrics.