Can a restaurant charge a dormancy fee on a gift card?

Only within tight limits. Federal law requires a year with no use, at most one fee a month, and the terms on the card. California allows one only on small balances after 24 months, and Florida and New York ban them.

What percentage of restaurant gift cards are never redeemed?

Restaurant chains that disclose it put breakage at roughly 6% to 15% of the value sold: Portillo's uses 12% and Noodles & Company about 15%. Your own rate depends on your guests, so measure it from two or three years of your own redemptions.

Can I sell restaurant gift cards at a discount?

Yes, but a bonus usually works better. Selling a $100 card for $80 cuts the margin on every meal it buys. A separate free $20 card marked "promotional" on the front, with its expiry date, can expire within weeks and pulls the extra visit into a quiet month.

Do I have to give cash back on a small gift card balance?

In some states. In California, balances under $15 must be paid in cash on request from 1 April 2026 (the limit was $10). In New York, the threshold is under $5. Elsewhere, check your state's rules.

Restaurant gift cards for the holidays: what to charge, and the law

Do restaurant gift cards expire? The federal five-year rule, dormancy fees, a 10-state escheat table, breakage accounting and card terms to copy.

By the TablePort teamFacts checked 7 November 202613 min read

It is early December, a regular wants a $100 gift card for her brother, and you have never decided whether your cards expire or what the small print says.

Under federal law, the money on a restaurant gift card cannot expire sooner than five years after the card was issued or last loaded. An inactivity fee is allowed only after a full year of no use, no more than once a month, and only if it is disclosed on the card. California, Florida and New York go further. The simplest policy that works in every state is a card with no expiry date and no fees, sold at face value. Last checked: 4 November 2026.

What does federal law say about restaurant gift cards?

The rules come from the Credit CARD Act of 2009 and sit in Regulation E at 12 CFR 1005.20, published by the Consumer Financial Protection Bureau (CFPB). Your restaurant's card is a "store gift card" under them, including a digital card you email: the CFPB's commentary says an emailed code is not "paper only", even if the guest prints it.

Four rules matter to a restaurant:

Funds last at least five years. The money must not expire before the later of five years after issue or the last load, or the date on the card.
Inactivity fees are tightly limited. A dormancy, inactivity or service fee needs a year of no activity, the amount and frequency stated on the card, and no more than one such fee in a calendar month.
Terms go on the card itself. Expiry and fee terms must be clear, given before purchase, and shown on the card (for a digital card, on the card or code you send). A leaflet, packaging or sticker does not count.
Cards with an expiry date need extra wording. The card must show the date the funds expire (or that they do not), a toll-free number for a replacement, and, where the card can expire before the money does, a statement saying so.

The CFPB's official commentary adds a shortcut: if a card carries no fees and neither the card nor the funds expire, you need not maintain or print a toll-free number.

Promotional cards labeled as such on the front fall outside these rules (see below). So do paper-only certificates, but that exclusion is lost once the code is also emailed, and California and New York cover paper anyway. State law that gives consumers more protection applies on top of the federal floor (15 USC 1693q).

Check with an adviser for your situation.

Do restaurant gift cards expire in your state?

The table covers nine of the 10 most populous states, each checked against the statute text (through public reprints of the code, or the legislature's own site) or a state agency's own guide. Michigan, the tenth, is left out because we could only find summaries of its law.

State	Expiry and fees	Unclaimed property (escheat)
California	No expiry date or service fee, with narrow exceptions (Civ. Code §1749.5). Dormancy fees only on a reloadable card with $5 or less left: $1 a month at most, after 24 months unused. Since 1 April 2026, balances under $15 are paid in cash on request (was $10), and electronic cards are covered (Morgan Lewis, 23 March 2026).	Not escheated unless the card has an expiry date and was sold for value (Code of Civil Procedure §1520.5).
Texas	Federal five-year floor applies.	Presumed abandoned at expiry or 3 years after issue or last use (Prop. Code §72.1016), but cards that never expire and carry no fees are excluded (Bus. & Com. Code §604.002).
Florida	No expiry date and no post-sale fees, including dormancy fees; exceptions for charity, employee-incentive and free promotional certificates (Fla. Stat. §501.95, text as of 1 January 2025). Bills to extend this to loyalty and promotional cards died on 13 March 2026.	Not reportable: the money for an unredeemed certificate belongs to the issuer (Fla. Stat. §717.1045).
New York	Funds cannot expire until nine years after issue or last load; dormancy, service and most other fees are banned; a balance under $5 is paid in cash on request (GBL §396-i).	Not exempt. Unredeemed gift certificates are deemed abandoned after five years, at face value (Abandoned Property Law §1315); a 2006 court decision applied this to expired certificates too.
North Carolina	No separate expiry statute found; the federal floor applies.	With an expiry date: presumed abandoned 3 years after issue, 60% of the unused value reportable (NC Treasurer guide, updated 22 September 2026). A card stating it does not expire, or with no expiry date, is excluded (G.S. §116B-54).
Pennsylvania	No state gift card expiry or fee statute found; the federal floor applies.	Presumed abandoned 2 years after the redemption period ends, or 3 years after issue if none is stated. Not applied to a "qualified gift certificate": no expiry date or period, and no post-sale charge or fee (72 P.S. §§1301.1 and 1301.6, Fiscal Code, as amended by Act 138 of 2006).
Ohio	No expiry date under two years from issue and no value-reducing fee in the first two years; a card with no expiry date stays valid until redeemed (R.C. §1349.61, current as of 1 January 2026). The federal five-year floor is longer, so it governs.	Excluded from unclaimed funds: a gift certificate or gift card "redeemable only for goods or services", whatever the expiry date (R.C. §169.01, effective 30 September 2025).
Georgia	The card must carry its terms, any expiry date conspicuously printed, and any dormancy or non-use fee printed on the card or a sticker; the federal floor sets the minimum term (O.C.G.A. §10-1-393(b)(33), current as of 28 March 2024).	Not exempt: a gift certificate unclaimed for more than five years is presumed abandoned, at the price the purchaser paid (O.C.G.A. §44-12-205, current as of 28 March 2024). No carve-out for cards without an expiry date or fees.
Illinois	No expiry date earlier than five years after issue and no post-purchase fee. The section excludes "gift certificates that are issued for a food product" without saying whether a restaurant meal counts, so do not rely on it (815 ILCS 505/2SS, current as of 1 January 2025).	Excluded if the value does not expire and carries no dormancy, inactivity or post-sale fee (765 ILCS 1026/15-102, amended by P.A. 102-288, effective 6 August 2021).

Before you sell, call or email your state treasurer's or comptroller's unclaimed property office and ask two questions: are restaurant gift cards reportable, and does the answer change if the card has no expiry date and no fees? Keep the reply with your gift card records.

In California, Morgan Lewis reports that district attorneys enforce the cash-out rule; Chipotle settled for $246,000 in October 2025. Selling in the UK? See our guide to restaurant gift vouchers.

Do I have to hand unused gift card balances to the state?

Sometimes. Unused gift card money can count as "unclaimed property", which some states make businesses report and send to the state after a set period. This is called escheat.

Alston & Bird's 2024 year in review (18 November 2024) counted 37 states that exempt gift cards from escheat or have no escheat law, many on condition that the card has no expiry date and no fees, and 14 jurisdictions, including the District of Columbia, that purport to require it. In the table, only New York and Georgia require it whatever your card terms.

North Carolina shows why the conditions matter: $30 left on a card with an expiry date is reported at 60% ($18) after three years, while the same card marked "does not expire" is not abandoned property at all.

How much gift card money comes back, and when?

At most chains that publish the figure, half to two thirds of the gift card balance owed at the start of the year came back as meals within that year, and about 6% to 15% of the value sold never comes back. That is our analysis of the latest annual reports (10-K filings) of 11 US restaurant chains, filed with the SEC's EDGAR system between February and September 2026. Seven disclose how much of the opening balance turned into revenue during the year:

Chain (fiscal year)	Owed to guests at start of year	Share that became revenue that year
BJ's Restaurants (2025)	$15.7 million	68%
Texas Roadhouse (2025)	$401.2 million	63%
Chipotle (2025)	$181.8 million	60%
Portillo's (2025)	$6.9 million	58%
Red Robin (2025, incl. breakage)	$24.3 million	54%
Cracker Barrel (year to Jul 2026)	$82.5 million	41%
Shake Shack (2025)	$2.6 million	34%

The same filings show how much never comes back (breakage). Portillo's raised its breakage rate to 12% from 11%, and Noodles & Company estimates about 15%, recognized over about 24 months. Bloomin' Brands booked $18.6 million of breakage against $294.1 million of cards sold in 2025 (6.3%), and Brinker $10.3 million against $127.4 million in its year to June 2026 (8.1%). The tail is long: Darden recognizes breakage over a period of generally 12 years.

Chains sell many cards through grocery and retail racks, so treat this as a range, not a forecast. Calendar-year chains are the closest match: their opening balance is the money taken over the holidays.

When can you count unused gift card money as revenue?

When you sell a card, the cash is not income yet: it is a debt you owe the guest in meals, earned as the card is used.

Under the US revenue standard (ASC 606), as summarized in PwC's Viewpoint guide, a business that expects breakage recognizes it gradually, in step with the cards guests do redeem. PwC's restaurant example: sell $50,000 of cards and expect 10% breakage ($5,000). If guests redeem half of the $45,000 you expect, you recognize $22,500 plus half the breakage, $25,000 in all.

The escheat catch. Where a state requires unused balances to be sent to the government, PwC says the business should not recognize estimated breakage as revenue. A restaurant in New York, where balances escheat after five years, has no breakage income to plan for. The Georgia Restaurant Association's 2017 note says the same for Georgia: remove the balance when you remit it, and book no revenue.

The decision rule. Book breakage only when both are true: your state does not take unused balances for cards like yours, and you have two or three years of your own card-by-card redemption history to estimate it from. Until then, keep the whole unused balance as a liability. Ask your accountant how to book it and how sales tax applies in your state.

What should a restaurant charge for gift cards?

Charge face value, with no purchase fee, no expiry and no inactivity fee. Fees add disclosure duties, are banned or nearly banned in California, Florida and New York, and in some states make the card reportable as unclaimed property.

You do not need to discount. In the National Retail Federation's holiday survey of 20 October 2026, gift cards topped the list of what consumers want to receive, at 47%.

Run bonuses as separate promotional cards. "Buy a $100 card, get a $20 bonus card" works better than one card loaded with $120. A free bonus card that says "promotional" on the front, with its expiry date there too, falls outside the federal gift card rules, so it can carry a short expiry. California allows this if the expiry date is printed in capitals in at least 10-point type on the front, and Florida and Texas also exempt free promotional cards. New York defines "promotional" strictly (issued for no money, with the statement and expiry on the front), so check there. Load the bonus onto the paid card and the whole balance is likely to be treated as a gift card. For points schemes, see our loyalty program guide.

Worked example. You sell 150 cards at $100 with a $20 bonus card valid from 2 January to 28 February:

Line	Amount
Cash taken in December (150 x $100)	$15,000
Of which redeemed within 12 months, at the chains' range	$5,100 to $10,200
Bonus cards issued (150 x $20 face value)	$3,000
Bonus cards redeemed, assuming 60% are used	$1,800
Ingredient cost of those meals at a 32% food cost	$576
Extra spend if each of 90 tables pays $40 beyond the $20	$3,600

The 34% to 68% range comes from the chain table above; the 60% redemption rate and $40 of extra spend are assumptions, so use your own. The 32% food cost is the 2024 full-service median from the National Restaurant Association. On these numbers, $576 of food cost brings 90 tables in during quiet January and February. The $15,000 is a liability until guests eat it, so do not spend it as profit. At the 2.8% median pre-tax margin in our US restaurant profit margin guide, very little of any sale is profit.

Gift card terms you can copy

Print this on the card or the digital card itself, and show it before the guest pays. Replace the square brackets.

[Restaurant name] gift card

Funds on this card do not expire. There are no fees.
Use it for food and drink at [location or locations].
Partial balances stay on the card for your next visit.
Not redeemable for cash, except where state law requires it.
Lost or stolen cards: contact [email or phone] with your proof of purchase.
Check your balance: [link or phone].

For a free bonus card (expiry date and the word "promotional" on the front):

PROMOTIONAL CARD. ISSUED FREE AS A PROMOTIONAL BONUS.
EXPIRES [28 FEBRUARY 2027]. VALID FROM [2 JANUARY 2027].
NO CASH VALUE. NOT FOR RESALE. NO FEES.
Use at [location or locations]. One card per table.

Checklist before you sell:

Card shows "do not expire" and "no fees"
Terms shown before payment, online and at the counter
State unclaimed property office asked, answer filed
California only: staff know to cash out balances under $15
New York only: staff know to cash out balances under $5
Bonus cards issued separately and labeled promotional on the front
Sales logged card by card (date, amount, each redemption), so you can measure your own breakage later
Accountant has agreed how to book sales, redemptions and breakage

Scammers love gift cards: the FTC's Consumer Sentinel 2024 Data Book records $212 million paid to fraudsters by gift or reload card in 2024. A "we never ask for payment by gift card" line on your website costs nothing.

Can TablePort handle this for you?

Yes, for selling and redeeming the cards. Your state's escheat and accounting rules stay with you and your accountant.

Sell online. Guests buy a card from your website at a preset or custom amount, add a message, and the recipient gets it by email.
Set your rules once. Choose your amounts and whether cards expire. Leave expiry off, and write your policy text so buyers see it before they pay.
Wallet cards. Guests can keep the card in Apple Wallet or Google Wallet.
Redeem at the register. Staff apply the card to a check, and the balance is tracked so the rest can be used on another visit.

The honest limit: TablePort does not file unclaimed property reports or book breakage for you. See Gift Cards.

Frequently asked questions

Do restaurant gift cards expire?: Not for at least five years under federal law, counted from issue or the last load. California and Florida ban expiry dates on most gift cards, and New York requires at least nine years. The simplest policy is a card that never expires.
Can a restaurant charge a dormancy fee on a gift card?: Only within tight limits. Federal law requires a year with no use, at most one fee a month, and the terms on the card. California allows one only on small balances after 24 months, and Florida and New York ban them.
What percentage of restaurant gift cards are never redeemed?: Restaurant chains that disclose it put breakage at roughly 6% to 15% of the value sold: Portillo's uses 12% and Noodles & Company about 15%. Your own rate depends on your guests, so measure it from two or three years of your own redemptions.
Can I sell restaurant gift cards at a discount?: Yes, but a bonus usually works better. Selling a $100 card for $80 cuts the margin on every meal it buys. A separate free $20 card marked "promotional" on the front, with its expiry date, can expire within weeks and pulls the extra visit into a quiet month.
Do I have to give cash back on a small gift card balance?: In some states. In California, balances under $15 must be paid in cash on request from 1 April 2026 (the limit was $10). In New York, the threshold is under $5. Elsewhere, check your state's rules.