Gift card question

How come most restaurants don’t allow their gift cards to be used toward the tip?

I would think it would be obvious. The restaurant would be paying money to the employee rather than back to themselves.

That makes too much sense.

Alternate, crazier, theory: if the recipient didn’t care for the restaurant, and preferred just to have the cash instead, he could approach the waiter/bartender and have this exchange–

Gift card holder: “I’ll have one small soda.”
Bartender: “Okay, that’ll be $1.95”
GCH: “Here’s a gift card. Hey, want a $20 tip?”
B: “Um. Yes.”
GCH: “Okay, put a $98.05 tip on this card, and give me 80 bucks from your pocket. That way your drawer will balance, and you get twenty bucks.”
B: “Ka-ching!”

It’s foolproof, I tell you!

That’s dumb. If I gave my son a gift of $100 cash to spend at a decent place and his bill is $85, he would pay $85 to the establishment and give $15 to the waiter/waitress.

If I gave him a $100 gift card for the same place, and he were allowed to use the card for the tip, the restaurant would still get their $85. What’s the big hairy deal?

In scenario #2 the gift doesn’t end up costing the receiver money out of his pocket.

The problem is the $15 that came back from the gift card would have to come from the till. I could be interpted as wage. Wages have SS tax, unemployment taxes, workers comp taxes paid on them. So the restraunt could end up on the hook for more than the $15 tip.

This would be the same thing with credit card tips too.

They do it because they can, and they get another 15% - 20% out of you.

Olive Garden had no problem with the tip coming out of a gift card. I handed the waitress the gift card worth $100 for a $78 check and told her to keep the change.

That goes for cash tips, too. Just because a large number of waitstaff illegally fail to report the amounts above the 15% the restaurant already has to report to the IRS, doesn’t mean that it’s not taxable. It is taxable. Waitstaff that don’t report this are stealing from our treasury and increasing the tax burden of all of the honest taxpayers.

Flawed analogy. A gift card is NOT cash. It represents money that’s already been paid to the restaurant before your son even steps in the door.

In scenario #2, the restaurant has already been paid $100, not $85. The $100 is already in their till. For the server to get $15 out of that, they are essentially taking $15 out of their till for the tip.

For another analogy, if your tab comes to $50, you don’t get to give them $50 and tell them to give $10 of it to the waitress for the tip.

The server will owe taxes on the $98 tip. He’s not going to do that for you.

Perhaps the reason is that people tend to stiff the servers if they can use the gift card for the tip. Come in with a $50 card. Spend $47 on food and drinks. When the bill comes hand over the $50 card and say “Keep the rest”. That’s not much of a tip. If the restaurant makes people pay the tip separately, they will try to spend the entire $50 on food and drinks and then they’ll give a proper tip because they’ll be forced to calculate the tip rather than just thinking that the balance left on the card should be in the ballpark.

So what? They have to do the same thing in the case of credit card payments that include tip.

Well then it doesn’t seem to be that big a deal to allow a gift card to be used for the tip. Arguments against it seem moot. Yet most restaurants disallow it.
I don’t like giving someone a gift that’s going to cost them money to use. Ergo, these places are losing business because of this silly policy.

The restaurant would much rather you came back another time to spend the rest of that money, not give it to the waitress.

No, not really. The gift card is supposed to go toward their bottom line, not the server’s. You can’t pay your $50 tab with a credit card and have them take the tip out of the $50. The tip is extra.

That’s Olive Garden’s choice. We’re just explaining the reasoning behind the other side.

Do you also give your friends gas money to get to the restaurant? That costs them money too. Unless they’re homeless or something, a few bucks for a tip on essentially a free meal isn’t going to break them, and they’d be asses to think so.

Also, my mom gave me a $50 Borders gift card for Christmas. The total of the two DVD sets I chose, plus shipping, came to more than $50. Oh noes, I had to spend some money to use the gift! So what, I got eight DVDs for $11 out of my pocket. It was still a very nice gift.

If it really concerns you that much, just give them the cash and say, “Here, take yourself out to Applebee’s [or wherever] with my compliments.” Or take them out to dinner yourself – so they get the bonus of the pleasure of your company.

But in scenario #1, your son might either:
1a. Realize that he now has $15 extra, so might stick around to order a dessert or a couple more drinks. Now the restaraunt has $100, and the server has a $20 tip, instead of $85 and a $15 tip.

1b. Leave with still having $15 on his card. Now he’s more inclined to come back next month and order another $85 dinner. Now the restaraunt has $170 and the server has a $34 tip.

No, now what both the restaurant and the server have is ZIP!

I’m giving him a gift card to a sporting goods store where he can use the entire amount of the card with no cash out of his pocket.

If he still wants a good meal he can use the card to get the right equipment and go hunting.:wink:

Are you serious? You think his purchase at a sporting goods store is going to come out to the exact dollar amount of the gift card?

Or are you going to ask him what he plans to buy, and then get them to give you a gift card for the exact amount of the purchase price plus sales tax? (Hint: they’re usually available in even dollar amounts only.)

Or are you saying that you think he’ll buy something that with sales tax comes out to LESS than the amount of the card, so that you’ve just given the store free money?

Is your cupholder broken??

Suppose you spend $5.00 of your gift card for food at the restaurant. It does NOT cost the restaurant $5.00 to buy, prepare and deliver that food to you. Hence, profit.

Suppose you charge $5.00 of your gift card toward your tip. The restaurant gets absolutely NOTHING out of that part of the transaction except for the dubious pleasure of keeping track of the card balance. They don’t want to do that any more than they want to give you back the card balance as cash (although some places will do that if the remaining balance is so low that it isn’t worthwhile for them to keep track of it in their system anymore.)

Makes sense to me, anyway.

I think what pkbites is looking to do is give the recipient the psychological sensation of totally free giftitude. If you take a $50 gift card to a retail store and buy something for $49.95, you don’t have to touch your own money. But if you take a $50 gift card to a restaurant and order a $40 meal and want to tip your server $10, you have to reach into your own wallet for that $10 bill.

Yes, technically the $10 you still have left on your gift card means that you still come out even, but it just doesn’t feel quite as present-ish.

You have to pay the sales tax. In WI, that’ll be at least $2.50 on a $50 purchase, more if there’s a county sales tax too.

If we’re going to nitpick over restaurant tips, let’s nitpick over sales tax too.

But you can pay the tax with the gift card. That’s the same as the tip. The store has to remove money from its till to give the government. No difference versus taking money out of the till for tips. It’s just that the store can’t screw the government, whereas a restaurant can easily screw over its employees.