The IRS has extensive guidelines for what expenses businesses can deduct from their income and what expenses can be reimbursed tax-free to employees.
See this publication (and other IRS pubs covering more situations):
http://www.irs.gov/publications/p535/ch11.html
Per diem for meals (including incidental personal expenses, for that matter) is specifically allowed as an alternative to cost reimbursement if the per diem complies with IRS standards, based on the Federal government's allowance schedule. Other than those specific exceptions, reimbursement must be for an "ordinary and necessary" business expense; otherwise it becomes salary to the employee and reported on the W-2. There are also more significant implications for companies.
To illustrate with a concrete example: My organization gives Amazon.com electronic gift codes as a reward to support staff for excellent performance. The value of the gift is included in the employee's W-2 (and the organization adds some cash to that payroll period to approximately offset the taxes).