How Restaurant.com Works
Restaurant.com sells gift certificates to local restaurants at deep discounts. Their normal price is $10 for a $25 gift certificate, but they often run promotions where you can buy the same $25 gift certificate for just $2 or $3.
$25 worth of food for $2! What’s the catch?
Each restaurant has their own set of restrictions. Some of the most common Restaurant.com restrictions:
- Minimum purchase ($35 or $50)
- Dine-in only
- Not valid Friday or Saturday night
- Alcohol does not count toward minimum purchase
- Not valid toward tax or tip
- Limit 1 per table
- Not valid with any other offers
- Expires 1 year from date of issue (except in CA where apparently it is illegal for gift certificates to expire)
But abide by these rules and regulations, and the Restaurant.com gift certificates really do work!
The Business of Restaurant.com
I couldn’t find out for sure, but I don’t think Restaurant.com has a revenue-share agreement with the restaurants themselves. Meaning whatever they charge for the gift certificate, Restaurant.com keeps 100% of the proceeds.
So restaurants are essentially “giving away” $25 gift certificates to get people in the door. Why would a restaurant sign up for this “service?”
- Attract new customers. Having a gift certificate mitigates risk for new customers to try a new restaurant. Maybe they’ll become regulars. Or maybe they’ll become regulars who always come armed with a Restaurant.com gift certificate.
- Fill empty tables. Empty tables are a huge opportunity cost for restaurants. Their overhead is the same whether the place is empty or packed, so might as well fill it, even if it is with low-profit-margin customers.
- Attract large parties. Sometimes customers will come with a group of 4-6, which will more than make up for the discount given.
- Customer feedback. Restaurant.com’s online system surveys each customer after they redeem their gift certificate. While this feature is less valuable now that sites like Yelp are popular, it is still a chance for the restaurant to get candid feedback from customers.
- Gives the restaurant an online presence. Obviously this feature was a bigger selling point back in 1999 before every restaurant had their own website, but is still preferable to have more web “real estate” than less.
- Cost-per-acquisition comparable or less than other advertising. As far as I can tell, Restaurant.com is “free” for restaurants to sign up. They just have to be willing to basically give discounts on customer checks, after certain criteria are met. Relative to Val-Pak or other print, online, or radio advertising, Restaurant.com may actually be a cheaper method of customer acquisition.
So Restaurant.com makes their money selling gift certificates someone else has to honor.
I have to admire any business with a gross margin of 100%!
Clearly, they have some infrastructure costs, website maintenance, etc. But their biggest cost has to be the sales staff required to sign up new restaurants and keep current accounts happy.
Restaurant.com Expert Tips
- Read the fine print. Look for restaurants with a low minimum purchase, without day-of-week restrictions, and without exclusions on what you can order (alcohol, etc).
- Check Yelp to see if the place is any good. Getting a good deal on bad food isn’t really that good a deal.
- Search for promo codes. You can usually find one for 50-70% off — meaning your $25 gift certificate will only be $3 – $5 instead of the $10 regular price.
Here’s my “real life” example. I searched our zip code on Restaurant.com and found a list of restaurants. Some I’d heard of and some I’d even eaten at, but most were unfamiliar. I was attracted to Mexxi’s Restaurant and Catering in nearby San Ramon. Time to work the system.
- Restrictions: Minimum purchase $35, dine-in only, not valid toward tax or gratuity. This means drinks count toward your $35, and you can go any day of the week. Awesome.
- Yelp. 4 Stars. Also a 2009 “Best of the Bay” winner. Score.
- Promo code. In under 5 seconds I found a code for 80% off. Sweet.
So for $2, I acquired a $25 gift certificate to Mexxi’s.
Restaurant.com Cost Example
How will the math work once we go and eat?
Let’s say we order the minimum $35. Add in tax (10%) and gratuity (18%) and the new total is $44.80… call it $45. Knock off the $25 gift certificate and we owe $20. Add in the $2 I paid for the gift certificate, and the out-of-pocket total is $22. More than half off, not a bad deal!
For the restaurant though, maybe it’s not the greatest deal. Of our $20 spent at the restaurant, $9.80 was tax and tip.
Not being familiar with typical margins at Mexican restaurants, I can’t say whether or not Mexxi’s will make money collecting $10.20 on a $35 check.
My guess is they at least break-even or else they wouldn’t be signed up with Restaurant.com.
How does restaurant.com work? Now you know!
Where does one find these elusive promo codes? Have you tried groupon.com?
just google “restaurant.com promo code”…not very elusive! I think Bryn groupons.
I’m having trouble understanding one thing. If the minimum purchases is say $30 and my card is worth $50 is that saying that I need to have a bill worth $80 and $30 of that needs to be paid out of pocket?
When do you present the coupon? At the beginning or the end of service?
in the app or the website shows the required minimum purchase so when you redeem the specific certificate amount like $10 off when spend $20 , the rest $40 will remain ,you just need to use the code again for another offer.
I don’t know if there’s something wrong with the app it’s saying 403 forbidden but I have a Lotta money on this website and I can’t use my certificates what’s going on any info
I hate to say this, but your math is incorrect on that example.
45-25=20
20+9.80=29.80 (actual out-of pocket-cost)
Also, theres about a half-dozen other states where gift certificates don’t expire. Do your homework.
FYI: The tip and tax you pay is on the full amount of the bill, just to clear it up.
Hi Eric, thanks for the comment. Let me clarify the math. On the order amount of $35 (minimum eligible order), tax was 10% or $3.50 and gratuity 18% or $6.30. So $9.80 in tax and tip + the original $35 order brought the total to approx. $45. Less the $25 gift cert leaves us at $20 out of pocket. Plus the $2 cost of the gift cert for a grand total of $22.
And you’re right about other states where gift certificates don’t expire, just I live in CA and am not familiar with the laws everywhere else.
Hi nick how do i find out what restaurants are on restaurant.com
You search your area on their site.
I been reading about rest.com for a while now I decided to try it when I saw on a blog the $25 certif were $2 every place here in Los Angeles,CA require that you pay 15-18% gratuity but I found one that doesn’t and it was so cool I went there with my mom husband and my little boy minimum purchase was $35 and we even had to order large beverages and a cookie to get to $35, and we were sooooo full. And we paid 10+2=12 for a big meal for 3 and a toddler. I loved that deal it was great.
Wow Sara you really are rude and cheap!!! Looked for the only restaurant not requiring tip and then didnt leave one you should be ashamed of yourself!
Um, cheapass, she didn’t say she didn’t leave a tip, she just looked for a place where it wasn’t *included* in the bill. I think maybe you should be a little more careful. You want to keep being a cheapass, not a dumbass.
Will, thank you for your comment to cheapass. It put a smile on my face for ten minuets.. Thank you.
Will, read what Sara wrote. She paid $10 of a $35 check plus $2 for the certificate = $12 ! No tip!
Did you leave a tip?
I was searching threw the restaurants in my area and I do not see the fine print as you called it. Where can i find this information so i can make an informed buy?
I’m not sure it’s the same for every restaurant, but I checked a couple. If you search by zip code, then click the restaurant’s name, in the upper left there is a blue Purchase a Gift Certificate box with the add-to-cart button. Right below that is a box with the restrictions. For example, the one I’m looking at says “Minimum purchase of $50. Excludes Fri. 20% Gratuity added prior to discount. Valid for Dinner, Food, Dine In ONLY.” Hope that helps.
I’m concerned about Sara’s comment. Apparently she didn’t leave a tip. Always tip on the pre-discounted amount. Non-tippers or lousy tippers are going to ruin this great deal for everyone.
If you want to test out Restaurant.com, I have a $25 Restaurant.com gift card I’ll send to the next person who leaves a comment. Consider it your bonus for reading this far!
Do you have anymore Nick? I would love to try it out
Im here LOL
Thank you for all of this fabulous information!!
I want to try it!!!
Nick, I’ll take you up on that offer for a $25.00 gift card from restaurant.com!