The restaurant business has its own language, and half the bad decisions I see operators make start with a term they half-understand. These are the definitions that matter, written the way I explain them to the owners I coach. — Josh Kopel

Money & Margins

Prime Cost

Prime cost is your food and beverage cost plus total labor cost, expressed as a percentage of sales. It’s the single most important number in a restaurant because it covers everything you can actually control week to week. Healthy independents typically hold prime cost around 55–60% of sales.

Food Cost Percentage

Food cost percentage is what you spend on ingredients divided by the food sales they generate. If a dish costs $4 to make and sells for $16, it runs a 25% food cost. The number only means something dish by dish — averages hide the items quietly draining your margin.

Net Profit Margin

Net profit margin is what’s left of every sales dollar after all costs — food, labor, rent, everything. Independent restaurants typically net 3–5%. See our full restaurant profitability guide for how to move it.

Blended Margin

Blended margin is the overall profit margin you get by combining a modest-margin dining room (10–12% net) with high-margin revenue layers like private events, corporate catering, and bulk gift cards (30–35%). It’s the realistic path to a 20% bottom line for an independent restaurant — the dining room alone almost never gets there.

Menu Engineering

Menu engineering is analyzing every item by profitability and popularity, then redesigning the menu — pricing, placement, descriptions — so guests order more of what makes you money. Items sort into stars (popular and profitable), plow-horses, puzzles, and dogs, each with its own fix.

P90 Pricing

P90 pricing is benchmarking your menu prices against the top of your local market — the 90th percentile — instead of the middle. Most independents underprice out of fear; P90 removes the emotion by anchoring your prices to what the strongest operators in your market already charge.

Operations

Covers

Covers are the number of guests served in a given period — not tables, not checks, people. Covers per shift is the cleanest measure of whether traffic is actually growing.

Table Turnover Rate

Table turnover rate is how many parties occupy each table during a service period. Turning a table one extra time per night, across a 15-table dining room, is the revenue equivalent of adding seats without paying for a build-out.

Daypart

A daypart is a distinct service window — breakfast, lunch, happy hour, dinner, late night. Adding or strengthening a daypart is one of the fastest ways to grow revenue with rent you’re already paying.

86 / Eighty-Six

To 86 an item is to pull it from availability — you’ve run out or stopped serving it. Chronic 86es are an inventory and forecasting problem wearing a kitchen costume.

Ghost Kitchen

A ghost kitchen is a delivery-only food operation with no dining room — one kitchen can run multiple virtual brands that exist only on delivery apps. Low overhead, but you’re building on rented land: the platform owns the customer relationship.

Fast Casual

Fast casual sits between fast food and full service: counter ordering with higher-quality food, typically at a $12–18 check. It’s the format with the most attractive labor model for first-time owners, which is why it leads our trending restaurant concepts.

Marketing & Guests

Owned Audience

An owned audience is the list of guests you can reach directly — email addresses and phone numbers you hold — as opposed to followers rented from a social platform. The average Instagram post reaches roughly 3.5% of followers; your email list reaches whoever you send it to. Owned beats rented, every time.

The Fourth-Visit Threshold

The fourth-visit threshold is the point where a new guest becomes a durable regular. Guests who reach four visits show materially higher lifetime value and lower churn, so your welcome offers, win-back flows, and rewards should be engineered to manufacture visits two, three, and four.

Loyalty Breakage

Breakage is the share of loyalty rewards or gift-card value that’s never redeemed. Some breakage is pure margin — but too much means your program isn’t compelling enough to change guest behavior, which is the entire point of running one.

Average Check

Average check is total sales divided by number of guests. Raising it through attachments, upsells, and menu design is the quietest revenue lever a restaurant has — no new traffic required.

Search & AI Visibility

Local Search Intent

Local intent means the searcher wants a nearby answer — “best pasta near me.” Google has said roughly half of all searches carry local intent, which is why your Google Business Profile often matters more than your website’s homepage.

AI Overview

An AI Overview is the AI-generated answer Google places above traditional results. When one appears, clicks to the top organic result drop sharply — so the goal shifts from ranking #1 to being the source the AI answer cites.

GEO (Generative Engine Optimization)

GEO is optimizing your content to be cited by AI assistants — ChatGPT, Gemini, Perplexity — the way SEO optimizes for ranking in Google. It rewards direct answers, citable statistics, clear structure, and named expertise. With 45% of consumers now using AI to find local businesses (up from 6% a year earlier), GEO is no longer optional for restaurants.

Schema Markup

Schema markup is structured data added to a page’s code that tells search engines and AI exactly what the page contains — a restaurant, a menu, an FAQ, a person. Guests never see it; machines rely on it. It’s how you make your expertise machine-readable.

Third-Party Delivery All-In Cost

The all-in cost of third-party delivery is the full take — commission plus marketing fees, placement, and processing — which often reaches 30–40% of order revenue, well beyond the advertised 15–30% commission. Price for the all-in number or treat delivery as paid customer acquisition, not a sales channel.

Want the numbers behind these definitions? See Restaurant Industry Statistics 2026 and the systems for applying them in my restaurant consulting guide.

About the Author: Josh Kopel is a Michelin-awarded restaurateur, restaurant consultant, and host of the Full Comp podcast — the voice of the restaurant industry. He has helped hundreds of restaurant owners build profitable, scalable businesses. Explore free restaurant resources →