Accounting for
Gift Cards in a Restaurant Group
by Raffi Yousefian | 15 November 2023 (updated 8 May 2024)
Properly accounting for gift cards is essential in restaurant groups. Each location’s profit and loss statement needs to accurately reflect its sales performance, and the balance sheet must show amounts owed and receivable due to gift card transactions between locations.
This area is often overlooked by accountants and bookkeepers because it demands initial setup, thoughtful planning, and modern accounting systems.
Franchise Model
In a franchise setup, the franchisor (corporate) handles gift card reimbursements. The process works like this:
- Store A sells a $50 gift card and collects the payment:
- Store A: Cash increases by $50; Liability to corporate increases by $50.
- Corporate: Gift card liability increases by $50; Receivable from Store A increases by $50.
- Store B redeems $15 from that gift card:
- Store B: Food sales increase by $15; Receivable from corporate increases by $15.
- Corporate: Gift card liability decreases by $15; Liability to Store B increases by $15.
- Corporate reimburses Store B $15:
- Store B: Cash increases by $15; Receivable from corporate decreases by $15.
- Corporate: Cash decreases by $15; Liability to Store B decreases by $15.
- Store A transfers the remaining $50 to corporate:
- Store A: Cash decreases by $50; Liability to corporate decreases by $50.
- Corporate: Cash increases by $50; Receivable from Store A decreases by $50.
The outcome: Store B records $15 in sales and receives $15 in cash. Store A’s P&L remains unaffected, as it merely transfers funds to corporate for allocation to servicing franchisees.
Restaurant Chain Model
Gift card accounting in a chain depends on ownership structures and whether gift cards are transferable between locations:
A. Chain with Corporate Entity
A corporate entity (holding or management company) facilitates centralized reconciliation:
- Store A sells a gift card:
- Store A: Cash increases; Liability to corporate increases.
- Corporate: Receivable from Store A increases; Gift card liability increases.
- Store B redeems part of the card:
- Store B: Food sales increase; Receivable from corporate increases.
- Corporate: Liability to Store B increases.
- Corporate transfers funds:
- Store B: Cash increases; Receivable from corporate decreases.
- Corporate: Cash decreases; Liability to Store B decreases.
- Store A transfers proceeds:
- Store A: Cash decreases; Liability to corporate decreases.
- Corporate: Cash increases; Receivable from Store A decreases.
This ensures Store B recognizes sales and receives cash, while Store A’s P&L remains unaffected.
B. Chain Without Corporate Entity
Each store manages inter-store obligations directly:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Receivable from Store A increases.
- Store A: Gift card liability decreases; Liability to Store B increases.
- Store A pays Store B:
- Store A: Cash and liability to Store B decrease.
- Store B: Cash increases; Receivable from Store A decreases.
Result: Store B gets credited $15, Store A retains $35 as a liability to itself or other stores.
C. Chain with Shared Ownership
When all locations share ownership, reconciliation is optional:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Gift card liability decreases.
- Store A: No entry.
- Consolidated balance sheets reflect net liabilities; Store B records sales.
Go Back
Sales:
(718) 333-0999 option 1
Customer care:
(718) 333-0999 option 2
Pecan Solutions Inc., a New York Corporation
Products
POS
Gift Cards
Rear Display
Payments
KDS
Dealers
Inquire about
opportunities
company
About
Blog
Privacy Policy
Pecan POS™ 2025
Accounting for
Gift Cards in a Restaurant Group
by Raffi Yousefian | 15 November 2023 (updated 8 May 2024)
Properly accounting for gift cards is essential in restaurant groups. Each location’s profit and loss statement needs to accurately reflect its sales performance, and the balance sheet must show amounts owed and receivable due to gift card transactions between locations.
This area is often overlooked by accountants and bookkeepers because it demands initial setup, thoughtful planning, and modern accounting systems.
Franchise Model
In a franchise setup, the franchisor (corporate) handles gift card reimbursements. The process works like this:
- Store A sells a $50 gift card and collects the payment:
- Store A: Cash increases by $50; Liability to corporate increases by $50.
- Corporate: Gift card liability increases by $50; Receivable from Store A increases by $50.
- Store B redeems $15 from that gift card:
- Store B: Food sales increase by $15; Receivable from corporate increases by $15.
- Corporate: Gift card liability decreases by $15; Liability to Store B increases by $15.
- Corporate reimburses Store B $15:
- Store B: Cash increases by $15; Receivable from corporate decreases by $15.
- Corporate: Cash decreases by $15; Liability to Store B decreases by $15.
- Store A transfers the remaining $50 to corporate:
- Store A: Cash decreases by $50; Liability to corporate decreases by $50.
- Corporate: Cash increases by $50; Receivable from Store A decreases by $50.
The outcome: Store B records $15 in sales and receives $15 in cash. Store A’s P&L remains unaffected, as it merely transfers funds to corporate for allocation to servicing franchisees.
Restaurant Chain Model
Gift card accounting in a chain depends on ownership structures and whether gift cards are transferable between locations:
A. Chain with Corporate Entity
A corporate entity (holding or management company) facilitates centralized reconciliation:
- Store A sells a gift card:
- Store A: Cash increases; Liability to corporate increases.
- Corporate: Receivable from Store A increases; Gift card liability increases.
- Store B redeems part of the card:
- Store B: Food sales increase; Receivable from corporate increases.
- Corporate: Liability to Store B increases.
- Corporate transfers funds:
- Store B: Cash increases; Receivable from corporate decreases.
- Corporate: Cash decreases; Liability to Store B decreases.
- Store A transfers proceeds:
- Store A: Cash decreases; Liability to corporate decreases.
- Corporate: Cash increases; Receivable from Store A decreases.
This ensures Store B recognizes sales and receives cash, while Store A’s P&L remains unaffected.
B. Chain Without Corporate Entity
Each store manages inter-store obligations directly:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Receivable from Store A increases.
- Store A: Gift card liability decreases; Liability to Store B increases.
- Store A pays Store B:
- Store A: Cash and liability to Store B decrease.
- Store B: Cash increases; Receivable from Store A decreases.
Result: Store B gets credited $15, Store A retains $35 as a liability to itself or other stores.
C. Chain with Shared Ownership
When all locations share ownership, reconciliation is optional:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Gift card liability decreases.
- Store A: No entry.
- Consolidated balance sheets reflect net liabilities; Store B records sales.
Go Back
Sales:
(718) 333-0999 option 1
Customer care:
(718) 333-0999 option 2
Pecan Solutions Inc., a New York Corporation
Products
POS
Gift Cards
Rear Display
Payments
KDS
Dealers
Inquire about
opportunities
company
About
Blog
Privacy Policy
Pecan POS™ 2025
Accounting for
Gift Cards in a Restaurant Group
by Raffi Yousefian | 15 November 2023 (updated 8 May 2024)
Properly accounting for gift cards is essential in restaurant groups. Each location’s profit and loss statement needs to accurately reflect its sales performance, and the balance sheet must show amounts owed and receivable due to gift card transactions between locations.
This area is often overlooked by accountants and bookkeepers because it demands initial setup, thoughtful planning, and modern accounting systems.
Franchise Model
In a franchise setup, the franchisor (corporate) handles gift card reimbursements. The process works like this:
- Store A sells a $50 gift card and collects the payment:
- Store A: Cash increases by $50; Liability to corporate increases by $50.
- Corporate: Gift card liability increases by $50; Receivable from Store A increases by $50.
- Store B redeems $15 from that gift card:
- Store B: Food sales increase by $15; Receivable from corporate increases by $15.
- Corporate: Gift card liability decreases by $15; Liability to Store B increases by $15.
- Corporate reimburses Store B $15:
- Store B: Cash increases by $15; Receivable from corporate decreases by $15.
- Corporate: Cash decreases by $15; Liability to Store B decreases by $15.
- Store A transfers the remaining $50 to corporate:
- Store A: Cash decreases by $50; Liability to corporate decreases by $50.
- Corporate: Cash increases by $50; Receivable from Store A decreases by $50.
The outcome: Store B records $15 in sales and receives $15 in cash. Store A’s P&L remains unaffected, as it merely transfers funds to corporate for allocation to servicing franchisees.
Restaurant Chain Model
Gift card accounting in a chain depends on ownership structures and whether gift cards are transferable between locations:
A. Chain with Corporate Entity
A corporate entity (holding or management company) facilitates centralized reconciliation:
- Store A sells a gift card:
- Store A: Cash increases; Liability to corporate increases.
- Corporate: Receivable from Store A increases; Gift card liability increases.
- Store B redeems part of the card:
- Store B: Food sales increase; Receivable from corporate increases.
- Corporate: Liability to Store B increases.
- Corporate transfers funds:
- Store B: Cash increases; Receivable from corporate decreases.
- Corporate: Cash decreases; Liability to Store B decreases.
- Store A transfers proceeds:
- Store A: Cash decreases; Liability to corporate decreases.
- Corporate: Cash increases; Receivable from Store A decreases.
This ensures Store B recognizes sales and receives cash, while Store A’s P&L remains unaffected.
B. Chain Without Corporate Entity
Each store manages inter-store obligations directly:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Receivable from Store A increases.
- Store A: Gift card liability decreases; Liability to Store B increases.
- Store A pays Store B:
- Store A: Cash and liability to Store B decrease.
- Store B: Cash increases; Receivable from Store A decreases.
Result: Store B gets credited $15, Store A retains $35 as a liability to itself or other stores.
C. Chain with Shared Ownership
When all locations share ownership, reconciliation is optional:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Gift card liability decreases.
- Store A: No entry.
- Consolidated balance sheets reflect net liabilities; Store B records sales.
Go Back
Sales:
(718) 333-0999 option 1
Customer care:
(718) 333-0999 option 2
Pecan Solutions Inc., a New York Corporation
Products
POS
Gift Cards
Rear Display
Payments
KDS
Dealers
Inquire about
opportunities
company
About
Blog
Privacy Policy
Pecan POS™ 2025
Accounting for
Gift Cards in a Restaurant Group
by Raffi Yousefian | 15 November 2023 (updated 8 May 2024)
Properly accounting for gift cards is essential in restaurant groups. Each location’s profit and loss statement needs to accurately reflect its sales performance, and the balance sheet must show amounts owed and receivable due to gift card transactions between locations.
This area is often overlooked by accountants and bookkeepers because it demands initial setup, thoughtful planning, and modern accounting systems.
Franchise Model
In a franchise setup, the franchisor (corporate) handles gift card reimbursements. The process works like this:
- Store A sells a $50 gift card and collects the payment:
- Store A: Cash increases by $50; Liability to corporate increases by $50.
- Corporate: Gift card liability increases by $50; Receivable from Store A increases by $50.
- Store B redeems $15 from that gift card:
- Store B: Food sales increase by $15; Receivable from corporate increases by $15.
- Corporate: Gift card liability decreases by $15; Liability to Store B increases by $15.
- Corporate reimburses Store B $15:
- Store B: Cash increases by $15; Receivable from corporate decreases by $15.
- Corporate: Cash decreases by $15; Liability to Store B decreases by $15.
- Store A transfers the remaining $50 to corporate:
- Store A: Cash decreases by $50; Liability to corporate decreases by $50.
- Corporate: Cash increases by $50; Receivable from Store A decreases by $50.
The outcome: Store B records $15 in sales and receives $15 in cash. Store A’s P&L remains unaffected, as it merely transfers funds to corporate for allocation to servicing franchisees.
Restaurant Chain Model
Gift card accounting in a chain depends on ownership structures and whether gift cards are transferable between locations:
A. Chain with Corporate Entity
A corporate entity (holding or management company) facilitates centralized reconciliation:
- Store A sells a gift card:
- Store A: Cash increases; Liability to corporate increases.
- Corporate: Receivable from Store A increases; Gift card liability increases.
- Store B redeems part of the card:
- Store B: Food sales increase; Receivable from corporate increases.
- Corporate: Liability to Store B increases.
- Corporate transfers funds:
- Store B: Cash increases; Receivable from corporate decreases.
- Corporate: Cash decreases; Liability to Store B decreases.
- Store A transfers proceeds:
- Store A: Cash decreases; Liability to corporate decreases.
- Corporate: Cash increases; Receivable from Store A decreases.
This ensures Store B recognizes sales and receives cash, while Store A’s P&L remains unaffected.
B. Chain Without Corporate Entity
Each store manages inter-store obligations directly:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Receivable from Store A increases.
- Store A: Gift card liability decreases; Liability to Store B increases.
- Store A pays Store B:
- Store A: Cash and liability to Store B decrease.
- Store B: Cash increases; Receivable from Store A decreases.
Result: Store B gets credited $15, Store A retains $35 as a liability to itself or other stores.
C. Chain with Shared Ownership
When all locations share ownership, reconciliation is optional:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Gift card liability decreases.
- Store A: No entry.
- Consolidated balance sheets reflect net liabilities; Store B records sales.
Go Back
Sales:
(718) 333-0999 option 1
Customer care:
(718) 333-0999 option 2
Pecan Solutions Inc., a New York Corporation
Products
POS
Gift Cards
Rear Display
Payments
KDS
Dealers
Inquire about
opportunities
company
About
Blog
Privacy Policy
Pecan POS™ 2025
Accounting for
Gift Cards in a Restaurant Group
by Raffi Yousefian | 15 November 2023 (updated 8 May 2024)
Properly accounting for gift cards is essential in restaurant groups. Each location’s profit and loss statement needs to accurately reflect its sales performance, and the balance sheet must show amounts owed and receivable due to gift card transactions between locations.
This area is often overlooked by accountants and bookkeepers because it demands initial setup, thoughtful planning, and modern accounting systems.
Franchise Model
In a franchise setup, the franchisor (corporate) handles gift card reimbursements. The process works like this:
- Store A sells a $50 gift card and collects the payment:
- Store A: Cash increases by $50; Liability to corporate increases by $50.
- Corporate: Gift card liability increases by $50; Receivable from Store A increases by $50.
- Store B redeems $15 from that gift card:
- Store B: Food sales increase by $15; Receivable from corporate increases by $15.
- Corporate: Gift card liability decreases by $15; Liability to Store B increases by $15.
- Corporate reimburses Store B $15:
- Store B: Cash increases by $15; Receivable from corporate decreases by $15.
- Corporate: Cash decreases by $15; Liability to Store B decreases by $15.
- Store A transfers the remaining $50 to corporate:
- Store A: Cash decreases by $50; Liability to corporate decreases by $50.
- Corporate: Cash increases by $50; Receivable from Store A decreases by $50.
The outcome: Store B records $15 in sales and receives $15 in cash. Store A’s P&L remains unaffected, as it merely transfers funds to corporate for allocation to servicing franchisees.
Restaurant Chain Model
Gift card accounting in a chain depends on ownership structures and whether gift cards are transferable between locations:
A. Chain with Corporate Entity
A corporate entity (holding or management company) facilitates centralized reconciliation:
- Store A sells a gift card:
- Store A: Cash increases; Liability to corporate increases.
- Corporate: Receivable from Store A increases; Gift card liability increases.
- Store B redeems part of the card:
- Store B: Food sales increase; Receivable from corporate increases.
- Corporate: Liability to Store B increases.
- Corporate transfers funds:
- Store B: Cash increases; Receivable from corporate decreases.
- Corporate: Cash decreases; Liability to Store B decreases.
- Store A transfers proceeds:
- Store A: Cash decreases; Liability to corporate decreases.
- Corporate: Cash increases; Receivable from Store A decreases.
This ensures Store B recognizes sales and receives cash, while Store A’s P&L remains unaffected.
B. Chain Without Corporate Entity
Each store manages inter-store obligations directly:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Receivable from Store A increases.
- Store A: Gift card liability decreases; Liability to Store B increases.
- Store A pays Store B:
- Store A: Cash and liability to Store B decrease.
- Store B: Cash increases; Receivable from Store A decreases.
Result: Store B gets credited $15, Store A retains $35 as a liability to itself or other stores.
C. Chain with Shared Ownership
When all locations share ownership, reconciliation is optional:
- Store A sells a card:
- Store A: Cash increases; Gift card liability increases.
- Store B redeems:
- Store B: Sales increase; Gift card liability decreases.
- Store A: No entry.
- Consolidated balance sheets reflect net liabilities; Store B records sales.
Go Back
Sales:
(718) 333-0999 option 1
Customer care:
(718) 333-0999 option 2
Pecan Solutions Inc., a New York Corporation
Products
POS
Gift Cards
Rear Display
Payments
KDS
Dealers
Inquire about
opportunities
company
About
Blog
Privacy Policy
Pecan POS™ 2025