Inventory Turnover for Hotels and Restaurants Food Outlets

Inventory Turnover is the responsibility of the Director of Food and Beverage and the Executive Chef to cause adherence to established turnover and inventory level goals. To establish a standard for food inventory levels. To provide guidelines for controlling capital invested in food inventories. To detail the methods for calculating and determining turnover.

Procedure for Finding Food Inventory Turnover:

A. General Procedure

The Trust standard goal for food inventory turnover is:

2.8 times per accounting period, or an equivalent of ten days inventory on hand. This is a total average turnover figure for the entire food inventory.

For those properties that have the benefit of a PC-based Food Purchasing MIS system, the turnover goals can be further broken down into the major MIS food categories to facilitate turnover management. Your turnover goals should be based on your inventory pars for restaurant sales, banquet sales volume and delivery frequency of food product.

Step by Step Calculation for Food Inventory Turnovers

Food Inventory Turnover Ratio = Consumption / Average Inventory

Consumption = Beginning Inventory + Purchases – Ending

Inventory

Average Inventory = [Beginning Inventory + Ending Inventory] / 2

This method is based on gross or “raw” consumption, which includes all credits to cost (i.e. Food to Cafeteria, Food to Bar, VIP Amenities, At Cost Functions, etc.)

When turnover ratios are shown on any financial report, the consumption and inventory figures must also be shown.