Fast Food Restaurants Industry Terminology

AUV (Average Unit Volume)

Average annual sales per restaurant location; a core benchmark for unit performance, franchise valuation, site selection, and royalty projections.

- Our AUV rose to $2.1M after the drive‑thru upgrade - That trade area supports a $1.3M AUV - Higher AUV lets us afford higher rent

Average Check

Mean revenue per transaction, usually net of discounts; driven by pricing, mix, and upselling.

- Average check increased $0.60 with the LTO - Bundles lifted average check at lunch - Mobile add‑ons boosted average check

Back-of-House (BOH)

Kitchen, prep, storage, dish, and employee areas not accessible to guests; operational heart of QSR throughput.

- Add a second fryer to relieve BOH bottlenecks - BOH layout impacts speed of service - BOH needs new food safety signage

Brand Standards

Documented requirements for recipes, build procedures, service steps, visuals, uniforms, cleanliness, and equipment that ensure consistency across units.

- That garnish violates brand standards - Audit flagged signage off‑brand - New fries spec updates brand standards

Build-To (Par-Based Replenishment)

A prep and inventory method that sets target quantities (pars) and produces/orders to the par level based on forecast.

- Build to 3 pans before dinner rush - Update par levels for soccer tournament - Par sheet shows we’re short lettuce

CapEx (Capital Expenditure)

Spending on long-lived assets like buildouts, remodels, fryers, HVAC, and digital menu boards; capitalized on the balance sheet.

- Allocate CapEx for drive‑thru canopy - CapEx plan includes KDS rollout - Delay CapEx until AUV recovers

COGS (Cost of Goods Sold)

Direct costs of food, beverages, condiments, and packaging used to generate sales; often called food and paper.

- COGS is trending 31% due to beef inflation - Waste is inflating COGS - Vendor rebates reduced COGS

Commissary Kitchen

Central production facility that preps ingredients or finished items for multiple units or virtual brands to improve efficiency.

- Sauces come from the commissary - Commissary enables limited on‑site prep - We’ll test a regional commissary for dough

Cross-Training

Training crew to work multiple stations (grill, fry, expo, DT order) to improve flexibility, coverage, and labor efficiency.

- Cross‑train cashiers on fries - Cross‑training reduced overtime - New hires cross‑train by week two

Delivery Aggregator

Third-party marketplace/logistics platform connecting guests and restaurants (e.g., Uber Eats, DoorDash, Grubhub) for delivery.

- Aggregator commissions are 25% - Optimize menus per aggregator - Turn off aggregator during surge

Digital Menu Board

Electronic displays replacing static boards, enabling dayparting, dynamic pricing, LTO swaps, and suggestive selling content.

- Daypart the breakfast board at 10:30 - Rotate upsell tiles by weather - Push the LTO on drive‑thru boards

Drive-Thru

Off-premise service channel with order point(s), pay window, and pickup window; dominant in QSR volume and speed.

- Add a second drive‑thru lane - Drive‑thru mix hit 70% - Headsets down; switch to speaker backup

Drive-Thru Timer (DT Timer)

System tracking car times by stage (queue, order, pay, pickup) to diagnose bottlenecks and improve speed of service.

- Window time exceeds target - DT timer shows long pre‑menu waits - Set SOS goal to 180 seconds

EBITDA

Earnings before interest, taxes, depreciation, and amortization; proxy for operating cash flow and valuation multiples.

- Franchise trades at 6x EBITDA - LTO lifted EBITDA margin 120 bps - Rent hike compressed EBITDA

Employee Turnover

Rate at which employees separate over a period; a key labor KPI impacting training cost, service, and consistency.

- Quarterly turnover hit 95% - Increase wages to reduce turnover - Cross‑training lowered turnover

FIFO (First In, First Out)

Inventory rotation method ensuring older stock is used before newer stock to reduce spoilage and food safety risk.

- FIFO the walk‑in produce - Date labels enable FIFO - FIFO violations raised waste

Food Cost Percentage

COGS divided by net sales; core margin KPI managed via pricing, portion control, waste, and vendor terms.

- Target food cost is 28% - Over‑portioning raised food cost - Vendor swap cut food cost 90 bps

Forecasting

Predicting sales by daypart and channel using history, events, weather, and promotions to set labor and prep.

- Storm lowers tonight’s forecast - Use PMIX for LTO forecast - Staff to 95% forecast at lunch

Franchise Agreement

Contract defining territory, term, fees, brand standards, training, support, and renewal/termination between franchisor and franchisee.

- Agreement requires remodel in year 7 - Royalty is 5% per agreement - Transfer needs franchisor consent

Franchisee

Independent operator who licenses the brand to run one or more units, paying fees and following brand standards.

- Multi‑unit franchisee added five stores - Franchisee meeting on labor KPIs - Strong franchisees mentor new owners

Franchisor

Brand owner who grants franchises and provides systems, supply chain, marketing, and operational support and governance.

- Franchisor launched a new POS - Franchisor audits brand compliance - Menu pricing guidance from franchisor

Ghost Kitchen

Production-only facility with no dining room; supports delivery-only and virtual brands with lower occupancy cost.

- Launch a wing brand in the ghost kitchen - Ghost kitchen expands trade area - We consolidated prep to a ghost kitchen

Guest Satisfaction Score (GSS)

Survey-based score of guest experience across speed, accuracy, taste, cleanliness, and friendliness; used for incentives.

- GSS dipped after menu change - Tie bonuses to GSS - Fix accuracy to lift GSS

HACCP (Hazard Analysis and Critical Control Points)

Preventive food safety system identifying hazards and critical control points for monitoring, limits, and corrective actions.

- Log CCPs for hot holding - HACCP requires calibrated thermometers - Corrective action: discard batch

Holding Time

Maximum time a cooked or prepped item can be safely held (hot or ambient) before discarding to ensure quality.

- Fries holding time is 7 minutes - Label pans with hold times - Expired product must be wasted

Inventory Turnover

COGS divided by average inventory; measures how quickly stock is used; higher is typically better for freshness.

- Turnover improved to 40x - Slow turns on sauces - Increase orders to weekly for faster turns

JIT (Just-In-Time Inventory)

Inventory strategy minimizing on-hand stock by receiving goods close to use time; reduces waste but raises stockout risk.

- JIT cut cooler clutter - Weather breaks JIT reliability - JIT needs accurate forecasts

KDS (Kitchen Display System)

Screens that display and route orders to stations, track make times, and replace paper tickets for accuracy and speed.

- Fire station 2 via KDS - KDS shows ticket time creep - Color codes prioritize late orders

KPI (Key Performance Indicator)

Quantifiable metric tied to goals (e.g., SOS, accuracy, labor %, food cost, GSS) used in dashboards and reviews.

- Weekly KPI huddle at 3pm - Hit KPIs to unlock bonuses - Update KPI targets post‑LTO

Labor Cost Percentage

Total labor expense (wages, taxes, benefits) divided by net sales; key profitability lever with scheduling and staffing.

- Labor % must stay under 25% - Cross‑train to lower labor % - Sales dip pushed labor % up

Limited Time Offer (LTO)

Time-bound menu item used to drive traffic, news, and mix shifts; requires supply planning and marketing.

- LTO starts Monday at open - Train builds for the LTO - End LTO when inventory runs out

Loyalty Program

CRM program rewarding visits/spend to increase frequency, basket, and first‑party data capture via app/web.

- Double points on Tuesdays - Loyalty lifted repeat visits - Redeem rewards in app at POS

Menu Engineering

Analysis of item popularity and contribution margin to classify stars, plowhorses, puzzles, and dogs for action.

- Promote star items on boards - Reprice puzzles, shrink dogs - PMIX feeds menu engineering

MOD (Manager on Duty)

The manager responsible for operations during a shift, including labor, SOS, guest recovery, and safety.

- Who is MOD tonight? - MOD approves comps - MOD assigns a second order taker

Mobile Ordering

Ordering via smartphone or web for pickup, curbside, or delivery; often integrated with loyalty and payment.

- Mobile orders spike at lunch - Stage mobile bags near expo - Turn on curbside in the app

Mystery Shop

Anonymous evaluation of service, accuracy, cleanliness, and brand standards; often tied to incentives or retraining.

- Mystery shop score was 94% - Coach team on shop findings - Missed greeting in mystery shop

NPS (Net Promoter Score)

Loyalty metric calculated as promoters minus detractors from a 0–10 likelihood-to-recommend question.

- NPS fell after price increase - Improve accuracy to lift NPS - Text surveys collect NPS weekly

Nutritional Disclosure (Calorie Labeling)

Regulatory requirement to post calories and other nutrition data on menus/menu boards for standardized items.

- Update calorie panels for LTO - Audit menu for labeling gaps - Back up claims with lab data

Off-Premise

Sales consumed away from the restaurant: drive‑thru, delivery, pickup, and catering; major QSR growth driver.

- Off‑prem accounts for 80% of mix - Expand off‑premise capacity - Staff expo for off‑prem surge

Operations Manual (Ops Manual)

Comprehensive SOPs covering food safety, prep, service steps, HR, cash, maintenance, and brand standards.

- Follow the ops manual build - Ops manual updated for KDS - New hires review ops manual

POS (Point of Sale)

Hardware/software system for orders, pricing, taxes, discounts, payments, and routing to KDS/printers.

- POS down; switch to offline mode - Push new menu to POS - Integrate loyalty with POS API

Prep List

Daily list of items and quantities to prep by station based on forecast, par levels, and holding times.

- AM prep list due by 9am - Add two pans of pico to prep - Prep list reflects game day

Prime Cost

COGS plus total labor; the largest controllable cost bucket, tracked as a percent of sales.

- Prime cost target is 60% - Waste pushed prime cost up - Scheduling fixes lowered prime cost

Product Mix Report (PMIX)

Report showing units and sales by item; informs forecasting, menu engineering, and LTO decisions.

- PMIX shows nuggets overtook tenders - Use PMIX to set par levels - PMIX validates price elasticity

QSR (Quick Service Restaurant)

Segment characterized by counter service, limited menus, high throughput, and value pricing; includes drive‑thru.

- We compete in QSR chicken - QSR traffic up 3% YOY - Fast casual differs from QSR

Remodel/Reimage

Capital refresh of interiors, exteriors, kitchen, and tech to modernize, boost AUV, and meet brand requirements.

- Remodel due in 2026 - Reimage adds digital boards - Post‑remodel comps up 6%

Same-Store Sales (SSS)

Sales growth for units open at least 12–18 months; isolates organic performance from new openings.

- SSS grew 4% in Q2 - Price drove SSS; traffic fell - Remodels lifted SSS in test

Speed of Service (SOS)

Time from order start to handoff; critical for drive‑thru and off‑premise satisfaction and capacity.

- SOS target is 180 seconds - Add a runner to cut SOS - KDS alerts on SOS misses

Third-Party Delivery

Outsourced ordering/logistics via aggregators; trades reach for commissions and reduced first‑party data.

- Shift volume to first‑party - Negotiate delivery commissions - Throttle third‑party during peaks

Unit Economics

Per‑store revenue, costs, and cash flow drivers (AUV, food, labor, occupancy, CapEx) that determine viability.

- Unit economics justify a second line - Bad unit economics: close it - Model payback from unit economics