What is inventory turnover and why is a high turnover desirable in F&B?

• A. Inventory turnover = cost of goods sold ÷ average inventory value; a high turnover indicates you should stock more inventory.
• B. Inventory turnover = average inventory value ÷ cost of goods sold; a higher number means slower movement.
• C. Inventory turnover = sales ÷ inventory; high turnover means stockouts.
• D. Inventory turnover = cost of goods sold ÷ average inventory value; a high turnover indicates efficient inventory management, minimizing waste and holding costs, and ensuring freshness.

Answer: (D)

Inventory turnover measures how quickly your inventory is sold and replaced in a given period. It is calculated as cost of goods sold divided by the average inventory value. In food and beverage operations, a higher turnover is desirable because it signals efficient inventory management: products move quickly, reducing spoilage, waste, and carrying costs, and helping keep stock fresh. It also improves cash flow since money tied up in inventory is converted to sales more rapidly. Keep in mind that very high turnover can risk stockouts if ordering isn’t aligned with demand, but the goal in F&B is usually to balance freshness and waste with reliable availability.