Restaurant gift certificates? Proceed with caution

If you're going to buy a restaurant gift certificate for a friend, relative, and business associate this holiday season, can you please do the recipient another huge favor?

Enclose a note that urges him or her to use it as soon as possible.

Restaurant gift certificates are fun to give and fun to get. But they seem to carry a degree of risk.

Here's why:

It's almost human nature for recipients to sit on them - to tuck them into a desk drawer and wait for a special occasion. Unfortunately, that special occasion invariably seems to arrive after the restaurant has gone out of business. (Hey - it's a free meal. Isn't that a special occasion?) 

Yes, we love independent restaurants and keeping our money local. Small businesses are the backbone of our economy and help define a city. Small businesses - and I'll include retail boutiques here, too - also come and go.

Even "rock solid" restaurants with good reputations don't last forever.

Gilmore's in West Chester was around for 11 years. That is no consolation to those still holding a gift certificate. Peter Gilmore abruptly shut his restaurant over the summer and declined to make good to his customers. On the plus side, the owners of Avalon in West Chester and the Yellow Springs Inn in Chester Springs accepted Gilmore's gift certificates at 50 percent face value in a good-will gesture.

State laws say that gift certificates never expire and that holders of certificates are truly creditors of the corporations that issue them. But when a corporation folds, the secured creditors are first in line to get any compensation. Not you, the lowly holder of a gift card.

My suggestions, besides including that note to the recipent to use the gift certificate right away:

  • Buy from a chain, or at least from a local operator with multiple locations, e.g. Iron Hill, Starr, Garces, Vetri, Lamberti. It's highly, highly unlikely that all their locations will go belly-up at once.
  • Use a credit card to buy the gift certificate and save the receipt. You may have recourse if the restaurant closes.
  • Take the recipient out to dinner and pick up the tab. This assumes you actually like the person enough to join him or her for a meal.