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Lauren Platero

Beverage Inventory Turnover: Formula, Meaning, and Tips

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If you work in a bar and restaurant setting, it’s important to be familiar with beverage inventory turnover and how to calculate inventory usage. Not only will understanding the beverage inventory turnover formula and meaning help you keep an orderly inventory management process, but it will also allow you to maximize profits in the long run. 

This blog post will teach you everything you need to know about beverage inventory turnover. Then, you’ll be able to identify gaps and opportunities when it comes to managing stock at your business. Now, let’s dive in!

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Beverage Inventory Turnover Formula 

To calculate the beverage inventory turnover for your business, you’ll need to determine its ratio. To break it down in simpler terms, this ratio will compare the cost of goods sold during a particular period to the average inventory value of that same period. Use the following formula to calculate the turnover ratio of beverage inventory:

Beverage Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Value

The cost of goods sold is a common metric that you’re likely familiar with. But what about the beverage inventory value? That’s simple! To calculate this figure, simply add the beginning and ending inventory from a particular period together and divide this result by two. 

It’s worth noting that a high beverage turnover ratio is a sign that you’re selling sufficient inventory. If the inventory turnover ratio is on the lower end of the spectrum, you likely aren’t meeting your bar’s sales quota. If this is the case, you should strongly consider implementing strategies to sell more beverages. 

Beverage Inventory Turnover Definition

Beverage inventory turnover refers to the process of drinks being sold in a bar or restaurant. When a bar and restaurant has a quick beverage inventory turnover, it means that customers are not only purchasing drinks, but a wide variety of options. 

A high beverage turnover rate means that you’ll be placing large or frequent restocks. However, if you have a high enough markup for each beverage on your menu, profits should soar far past inventory expenses.

3 Tips for Speeding Up Beverage Inventory Turnover 

If you find that beverage inventory turnover isn’t moving as quickly as you’d like, there’s no need to worry. Bars and eateries of all sorts can implement simple solutions to promote the sales of various ingredients. Plus, scaling back on what you keep on hand is always an option. See below for three easy tips to begin using now to achieve an ideal beverage inventory turnover ratio:

  1. Identify what you specialize in. For instance, restaurants with accolades from the Michelin Star Guide likely sell wine more than anything else. Therefore, it’s not essential for them to have an extensive variety of hard liquor behind the bar. 
  2. Rotate your menu of drink specials. If you find that certain beer brands or mixed drink recipes aren’t selling like you hoped, create promotions. For instance, create thematic recipes or discount certain drinks during happy hour. Doing so can boost the turnover rate of the ingredients that go into such beverages. 
  3. Update your upcoming purchase order quantities. Once you notice that certain beverages aren’t selling as quickly as they should, limit their replacements. You don’t have to discontinue different drinks entirely, but it would be cost-effective to limit your spending on such items.
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Automate the Beverage Inventory Turnover Calculations

 Did you know that there are solutions that utilize real-time data to display the beverage inventory turnover ratio? With a bar inventory app like BinWise, the days of manually tracking inventory and various statistics are over. Instead, you can quickly view sales trends, perpetual inventory, in-progress purchase orders, and so much more. Schedule a demo today to view our platform in action!

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Reduce inventory counting time by as much as 85%. Schedule a demo now:
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