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Restaurant Business Glossary

Over 290 terms on management, finance, operations, and strategy for restaurants and hospitality businesses. The vocabulary that professionals actually use.

Restaurant management glossary — ChefBusiness consulting Madrid
About this glossary

The language of <em>the restaurant business</em>

When I started in this industry, the hardest part was not the cooking — it was learning the language of the business. Break-even point, working capital, prime cost, soft opening… terms that show up in any serious conversation about a restaurant and that, if you do not master them, leave you out of the most important decisions.

This glossary was born from years of work as a restaurant consultant: from meetings with owners who were billing well but did not know whether they were making money, from talented chefs who could not understand why their restaurant was not surviving, and from entrepreneurs opening without knowing the basic terminology of the sector.

Here you will find over 290 definitions organized into 14 areas, written in plain language and applied to the reality of a hospitality business. It is not an academic dictionary. It is the guide I wish I had when I started.

290 Terms
14 Topic areas
129 Critical concepts
The essentials

The 10 most <em>critical</em> terms

If you can only remember ten concepts from this entire guide, make it these:

Food Cost

Percentage of selling price spent on ingredients. Target: 28-35%.

Prime Cost

Sum of food cost + labor cost. The most important profitability indicator.

Break-even Point

Sales level at which the business starts to generate profit.

Working Capital

Cash available to run day-to-day operations without taking on new debt.

RevPASH

Revenue per available seat per hour. Measures the efficiency of your dining room.

Contribution Margin

What each dish earns after subtracting ingredient cost.

Soft Opening

Controlled, progressive opening before the official launch.

Average Ticket

Average spend per customer per visit. Critical for forecasting.

Table Turnover

How many times a table is occupied during a service.

NPS

Customer loyalty indicator: how likely they are to recommend you.

14 topic areas

Explore the glossary by <em>area</em>

Finance and Profitability

38 terms

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Opening & Pre-Operations

21 terms

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Operations & Kitchen

34 terms

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Staff and Human Resources

29 terms

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Marketing, Sales and Customer

28 terms

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Business Model and Strategy

27 terms

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Menu and Product Engineering

18 terms

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Legal, Tax & Regulatory

19 terms

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Technology and Digitalization

13 terms

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Sustainability and Trends

8 terms

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Space, Design and Physical Experience

18 terms

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Diagnosis, Audit and Methodology

11 terms

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Investment, F&B and International Expansion

11 terms

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Types of Food Service Concept

15 terms

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Need help?

Knowing the terminology is the first step

Knowing how to apply it to the reality of your restaurant is where theory turns into results. At ChefBusiness, we work with owners and chefs who want to manage their business with professional criteria, not just intuition.

The first step is always the Gastronomy Diagnosis: 21 days of work together to identify exactly where money is leaking and which actions have the biggest impact.

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FAQ

Frequently asked questions about restaurant management

What is prime cost and why is it the most important indicator in a restaurant?
Prime cost is the sum of food and beverage cost plus labor cost. It represents the two largest expense blocks in any restaurant, which makes it the indicator with the greatest impact on profitability. If prime cost exceeds 65% of sales, the business has very little margin to cover the rest of its fixed costs.
What is the difference between break-even point and profitability threshold?
They are used as synonyms in most contexts. Both refer to the sales level needed for the business to neither lose nor make money. In some financial contexts, the profitability threshold also includes amortization of the initial investment.
What is a soft opening and how long should it last?
A soft opening is the progressive, controlled opening of a restaurant before its official launch. Typical duration is 1 to 4 weeks. The restaurant operates with fewer tables, selected guests, or limited audience to detect and correct operational issues before going live.
How is working capital calculated in a restaurant?
It is calculated by subtracting current liabilities (short-term debts and pending payments) from current assets (cash, pending receivables, inventory). A positive working capital indicates the business can meet its obligations without additional financing.
What food cost percentage is normal in a Spanish restaurant?
Standard food cost ranges between 28% and 35% of selling price. Daily-menu restaurants operate at the lower end; à la carte restaurants can tolerate slightly higher food costs if average ticket compensates.
What is the difference between dark kitchen and ghost kitchen?
A dark kitchen operates exclusively for delivery under a single brand. A ghost kitchen can host multiple virtual brands within the same physical space, with separate equipment and production zones.
Is a HACCP plan mandatory to open a restaurant in Spain?
Yes. The HACCP system is mandatory for any food service establishment in Spain under European food safety regulations. Implementing it is a requirement for obtaining the health license.
What does RevPASH mean and what is it for?
RevPASH (Revenue Per Available Seat per Hour) measures the revenue generated by each available seat in each hour of operation. It allows comparing the efficiency of different services and detecting underused time slots.

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