I had a variation of this played yesterday at the New Horseshoe Bar & Grill (Loomis, CA.) The young woman returned with my AMEX card (miles and HHonors points,) and told me they had run the card several times but it was not accepted - perhaps the mag stripe was wearing, etc. So, they took my MC - but my AMEX worked fine at the gasoline station a while later, and again at another restaurant...

It feels like I was told a lie so they could run a card that is cheaper to them than AMEX, and that takes less time to pay them. (Though some of the food is OK, the occasionally loud banter from the kitchen and the highly inexpert table waiting may be clues people are not supporting them as they would like.)