Gift Card and Loyalty Program Liabilities: Who Actually Owes What

Every unredeemed gift card and unused loyalty point represents a real, quantifiable promise your restaurant owes someone. In a sale, that promise doesn't just disappear — it becomes a negotiating point.

Outstanding gift card balances and loyalty program points are technically a liability on your books, even if they've never been formally tracked that way. When you sell, someone has to honor those promises — and by default, that someone is usually your buyer, whether or not that's been explicitly discussed.

Why this is often bigger than owners expect

Gift cards frequently go unredeemed for months or years — sometimes never. Over the life of a restaurant, this can add up to a meaningful, if easy-to-overlook, number.

That $17,000 is money your restaurant already collected, but still owes in food and drink to whoever holds those cards — and it's exactly the kind of number that needs to be addressed explicitly in a purchase agreement, not assumed away by either side.

How this typically gets handled in a deal

• Disclosed as part of financial diligence — buyers should see your actual outstanding gift card and loyalty point balances well before closing, not discover them afterward from angry customers.
• Factored into the purchase price or working capital adjustment — since the buyer is inheriting an obligation, this is often negotiated as a dollar-for-dollar reduction in price, or held back in an escrow.
• Explicitly assigned in the purchase agreement — the agreement should state plainly whether the buyer is assuming this liability, and for how long outstanding cards/points remain valid.

Loyalty programs add another layer

If you run a points-based loyalty program, especially one tied to a specific POS or software platform, there's an added question of whether that program itself transfers — technically and contractually — to the new owner, or whether it needs to be phased out with advance customer notice. This is worth resolving well before closing, since abruptly killing a loyalty program can create real customer goodwill problems for whoever's name is on the door when it happens.

What to do now, regardless of your timeline

• Get an accurate current count of outstanding gift card balances — most POS systems can run this report directly
• Understand your loyalty program's actual outstanding point liability in dollar terms, not just point counts
• Decide, ideally with your accountant, whether you want this reflected as a price adjustment, an escrow, or a buyer-assumed liability going into negotiations — rather than figuring it out reactively at the closing table