Restaurants come and go, so use those gift certificates soon

This article was published in The Inquirer on Dec. 4, 2004.

Restaurant gift certificates can be a joy. They're easy to buy, a cinch to wrap. And they portend good times - a night on the town on a friend's dime.

But they can also be a bummer. Given the constant churn of the restaurant scene, countless customers end up holding useless pieces of paper when the issuer goes out of business.

Restaurant gift certificates accounted for a sizable chunk of the $45 billion in retail gift-certificate sales last year, according to Bain & Co., a Boston-based consulting firm.

How do you protect yourself? The cardinal rule for consumers is simple, according to Jack Gillis, a spokesman for the Consumer Federation of America in Washington: Redeem them as soon as possible.

"I put them in a file in the kitchen, with a big note, 'Be sure to use this,' " he said.

Sometimes, though, you may not be able to book a table fast enough. In 1994, Odeon, a once-popular Center City bistro, was still selling gift certificates on Christmas Eve - and the place was out of business by New Year's Day.

Toto, across from the Academy of Music for 20 years, recently sent a letter advising customers that it would also be shuttered after New Year's Eve. Still, a reporter seeking to buy a gift certificate on Nov. 23 was never told of the impending closing.

In a telephone interview, owner Toto Schiavone called it an oversight and said the employee should have warned the customer. He said any Toto gift certificates would be honored at Moonstruck, his other restaurant, in the city's Fox Chase section.

Which brings us to tip No. 2 from Gillis: Buy from restaurants that have more than one location.

Stephen Starr, who owns 13 restaurants in town, including the popular Striped Bass, Morimoto, and Pod, began selling gift cards this year and they are good at all of his restaurants.

Gillis also suggests buying from a "restaurant you know."

Joe and Jackie McLaughlin of Columbus, Burlington County, got a gift certificate in April as a 48th-anniversary present from a daughter who lives in California. She had heard about the restaurant on the Internet. It was Salt, near Rittenhouse Square.

"When she called, she asked them, 'Is $100 enough?' " said Joe McLaughlin. "They told her, 'You better get $150. ' " She did.

Salt closed three months later. The McLaughlins now have a fancy slip of paper with the Salt logo and a handsome envelope.

They seem to have no recourse. In an interview, owner David Fields said that he had no money to reimburse the McLaughlins.

Gillis said gift-certificate holders are often left with nothing after a closing. If a restaurant files for bankruptcy, a holder - technically a creditor - can get in line to collect, but it's highly unlikely he or she will be compensated.

The laws are clearer regarding certificates that have expired. In Pennsylvania, businesses must turn over the monetary value of gift certificates to the state within two years after their expiration date. If certificates do not have expiration dates, businesses must turn over the money from unredeemed certificates within five years of the issuing date. The state treasury holds the money in its unclaimed-property files.

New Jersey law requires gift certificates to be valid until redeemed unless conditions and limitations are fully disclosed.

But if the restaurant is out of business, the gift certificate is worthless - unless you have a hole in the wall that needs patching.

If you're buying a gift certificate:

Buy from established restaurants, preferably from ones that have more than one location.

Encourage the recipients to use the gift certificate as soon as possible.

Consider taking them to dinner yourself, unless they are wretched dining companions.

If you've received a gift certificate:

Use it right away.

If the restaurant has closed, hold onto it. In a bid for goodwill, the restaurant that takes over the space may honor it, but is under no obligation to do so.