re: I think it's a bad idea to close restaurants.

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They don't. These morons actually think they're helping keep a business open by purchasing gift cards.

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They are...

I have my doubts that it will make a noticeable dent, but it is a valid concept for cash flow, and cash flow is the entire point of this idea.

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you are quickly in and out it will provide greater social distancing.

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That's nice in theory but, this past weekend proved it's not possible with the idiots of today. Can't take any chance by opening up restaurants to the public.

Besides, if someone is sick and they are preparing food... Just imagine how many people will get infected if they have happy hour. That's why they need to be shut down.

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Spoilage? Are you referring to gift certificates expiring or food spoilage? Food spoilage is not revenue. Payments with gift certificates are also not revenue (it is a realization of the revenue earned when the gift certificate is purchased), and expiring gift cards would not be able to be recognized for at least a year. Purchasing gift certificates is only helpful for short-term cash flow. Everyone doing this is not helpful for a business' long-term outlook. That's nonsense.

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Gift card spoilage. If someone purchases a $100 gift card from a merchant, that merchant gets $100 cash. Let's say on average only 90% of a gift card's value gets used. Not only does the merchant get the benefit of the cash up front, but they get the additional benefit of only having to provide 90% of the value in goods or services later on, realizing an additional $10 down the line.

Small businesses operate on cash flow. Getting cash up front is huge, regardless of the mechanism for recognizing the revenue from an accrual standpoint. Aside from fulfilling the gift card value later on when it is redeemed, that doesn't actually impact anything but GAAP income and potentially income tax (assuming they're not a cash basis taxpayer).

Edit: "Breakage" is probably the most appropriate accounting term. I'm talking about gift cards.

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Gift card spoilage. If someone purchases a $100 gift card from a merchant, that merchant gets $100 cash. Let's say on average only 90% of a gift card's value gets used. Not only does the merchant get the benefit of the cash up front, but they get the additional benefit of only having to provide 90% of the value in goods or services later on, realizing an additional $10 down the line.

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You're talking about a long way down the road here. Years from now. This will not be a benefit to this business in this year, which makes it pretty useless to the discussion of whether this helps them get through this period.

ETA: People may gawk at the "years from now" part, but government intervention made sure that part is 100% accurate. Gift cards/certificates can not expire for quite a long time.

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If someone buys a $100 gift card and doesn't use it until next year, it absolutely can help the business satisfy its fixed costs in the near term, when its cash flow from normal sales will presumably drop significantly.

Are you saying that if you asked a bunch of businesses whether they would prefer to be paid for their services up front or in arrears, they would all opt for the latter? That's nuts, dude.

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That's not what a gift card does. If everyone goes and buys a gift card, the business has to assume those will be used. If everyone calls in the chips at once, that creates a cash flow problem. The expiration issue you mention is the only possible benefit to the business, but that is only beneficial during normal courses of business. It isn't beneficial as the only source of revenue.

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That's not what a gift card does. If everyone goes and buys a gift card, the business has to assume those will be used. If everyone calls in the chips at once, that creates a cash flow problem. The expiration issue you mention is the only possible benefit to the business, but that is only beneficial during normal courses of business. It isn't beneficial as the only source of revenue.

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Well, yeah. The difference is that they can use the current cash flow to keep the lights on while the economy sucks and use their normal operating cash flow later down the line to cover the cost of sales once the business has picked back up. If it didn't make economic sense for a business to sell gift cards they...wouldn't do it.

Every grocery store near my house looks like it was looted.

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It may help with short-term cash-flow

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I think that is the concern and the point...a micro, short term loan...the little I do know about the restaurant business is that the slightest bump in the road can put them out of business...this may could get them through a brief cash crunch.

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Went to target for a work from home monitor.

They had only 3 lanes open for checkout.

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And that’s in response to panic buying.

I hear Walmarts everywhere are up to two lanes open now. Same reason.