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Gift Certificates and Tipping

What do you do?

You have just eaten a meal at a restaurant you wouldn't be in, except that you got a gift certificate. (a gc that was paid for, not a comp) Your gc is $60, your bill was $51. You put the gc in the envelope. The waitress brings it back with a brand new gc for $9. You will not be eating in that restaurant again. What do you do about the tip?

If you leave the gc, will the restaurant give her cash at the end of the evening? If not, can she substitute it for cash the next time another patron pays in cash? Or have you effectively stiffed her?

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  1. You've stiffed her. Tip her in cash.

    1. D,

      Gotta manage the bill a little better. Never leave a small amount on the GC, it will never be used and will be found money for the resto. When the bill arrived I would have ordered a dessert to go, get over the face value at all costs.

      WRT the tip. That is paid in cash or the waitress might get stiffed. And, as you know should be as a percentage of the meal as if the GC was not present.

      7 Replies
      1. re: jfood

        Most gift certs state that the cert cannot be used for either tax or tip but only goods purchased. Always go over the amount of the cert. You won't be out much and far less than the cost of the meal had you gone without the cert.

        1. re: Le Den

          See, there's my problem with it. Nowhere on the gc did it mention any restrictions, nor did the restaurant's website which I checked before we went (because I'm obsessive) I think it's an awfully poor business practice on the part of the restaurant to give me a $9 gc. I understand you are saying this is a common practice, but I don't understand why. If the giver of the gc paid $60 to the restaurant to buy the cert., then the restaurant is not LOOSING anything to give back change, no matter how much it is.

          The wine list was so bad I didn't bother ordering a glass and the food was so bad I didn't want dessert. Normally I don't have too much trouble running up a bill ;-)

          1. re: danna

            huh? How are they not loosing anything if they give you cash back? They are loosing the $9 aren't they?

            I assume restaraunts operate like a retail store in this regard they can't actually include the cash from a gc sale until they are redemed for goods/food/products?

            1. re: rob133

              They aren't loosing anything. They were originally given $60. In exchange, you receive a meal (estimated to be at a cost of 50% of $50)and $9. If they gave you the entire amount of the gift cert back(instead of a meal), they still would not be loosing anything.

              The only thing they have "lost" is the potential gross margin they would have made if you ordered another $9 item. But that's an opportunity cost, not an economic loss.

              1. re: danna

                Just becasue the company are making less profit, if they give you $9 in cash they are still giving away money. the originally had $60 and they only end up with $51, the actual 'cost' of the meal is irrelevant in this case.

                1. re: rob133

                  I am an accountant, and I believe you are correct in your post below about how gift cards are accounted for. A gift card sale should be defered revenue until the time it is redeemed.

                  However, you are mistaken in saying they are "giving away money" unless you think that if you buy a shirt at a store, and then return it for cash, the store is "giving away money". They are merely back to even.

                  Anyhow, I didn't mean to bore the crap out of people with a discussion of accounting. I just wondered how servers handle this in the real world.

                  1. re: danna

                    Okay, I here what your saying with that analogy, guess I'm simply coming at tat paticular part of the issue from a different angle.

      2. Spend the whole GC, tip s/b in cash.

        1. I don't get your dilemma: if the service was good, leave a tip! Just because you hate the restaurant and you only went there because it was a free meal doesn't mean your server should suffer. Of course your server can't "cash in" what you haven't spent as his/her tips.

          4 Replies
          1. re: justjoy

            See, that's my question: My husband thinks the restuarant will cash out the gc at the end of the night. I think they won't, but that all the server needs to do is substitue the $9 gift card for $9 cash on the next transaction. I'd like to hear from someone in the business whether either of us is correct. Thanks.

            1. re: danna

              It is probably an accounting issue. When the restaurant recieved the $60 for the gift certificate, they have to apply that money to an account. They can't just sit on the money until the gift certificate is used, so they apply it towards food/beverage. So, while they would not technically be "out" the nine dollars, they would have to change the accounting each and every time someone used a gift certificate. This is not at all practical for any restaurant. Also, depending on how a restaurant works, yes, a server probably can recoup the tip by applying the remainder of the gift certificate to another check, but it's a little bit sneaky. I always feel like I am cheating when I have to resort to such behavoir. As a customer, I would never force a server into that position.

              1. re: hilltowner

                I'm not an acocuntant, but when I worked in retail when we sold a gift card it was not registered as a 'retail sale' (ie no product/service was purchased - simply an intent to provide one in the future). We (ie the store) only 'recieved' the sale when the card was redemmed.

                1. re: rob133

                  The accounting entry in your scenario would be to debit cash and credit a deferred revenue account which is a liability; then when the GC is used, it's debit deferred revenue and credit revenue.

                  However, this issue has nothing to do with accounting, as the cash received for the GC should go into the general bank account regardless of how you account for it.

                  Rather, it has to do with restaurant policy wrt GCs which is set by the owner. If the owner's policy is that GC cannot be redeemed for cash, then leaving the $9 GC as a tip would mean the waitress is stuck with the GC to use as she chooses, unless the owner is kind enough to make an exception to the policy and cash it for her. Or, as someone already stated, she can be sneaky and secretly redeem it against another patron's dinner.

          2. I just used a gift card at a local place, and it worked just like a credit card, when they gave me the slip to sign, it listed the balance left on the card and I was able to leave the balance as the tip.

            I can see the ploy to not allow you to use the residual as a tip - what's the chance you will ever use that $9 left over? That's $9 more profit for the restaurant. Kinda lame for customers and staff though if you can't use the residual as a tip.