In this study, the key gaps of food waste prevention have been addressed in the context of the emerging circular economy. First, current terminology related to food waste was reviewed and clarified, in particular, the terms food surplus, waste and losses. This work highlights why the clarity of these definitions is crucial for the sustainability of future food waste management systems, especially in the context of circular economy. Through a simple matrix, definitions are linked to the concepts of edibility and possibility of avoidance, leading to six distinct categories of food waste: i) edible, ii) naturally inedible (pits), iii) industrial residue, iv) inedible due to natural causes (pests), v) inedible due to ineffective management and vi) not accounted for. Category I encompasses surplus food only; category II-V food waste and category VI food losses. Based on this, an updated pyramid for food waste hierarchy is proposed, distinguishing surplus food and a new category for material recycling, in order to reflect the future food waste biorefineries in the circular bioeconomy. Nutrient and energy recovery are two separate categories and the terms recovery and recycling are clarified. Finally, a circular economy framework is presented for food surplus and waste, considering closing the loop throughout the whole food supply chain, in connection with the concept of strong and weak sustainability. This is presented along with a review of key EU policies related to food waste and examples of initiatives from the Member States.