Had a long chat with a manager of a restaurant where I eat often, and he was amazed at how much I knew about all five of the restaurants in their (local) "chain", after I inquired about when a trial program at one restaurant might expand to the Gaithersburg, Maryland restaurant we were in at the moment--he was in charge of that trial program across the "chain".

Anyways, when I asked why the several Virginia restaurants I checked were all leaving the Dining Rewards program at the end of October, while the Gaithersburg restaurant had already dropped out of the program before then. After another amazed look, he explained how they set it up.

Dining Rewards and the restaurant each would get 25% of the cost of the food sold to members of the program. The restaurant gets it's 25% fronted to it by Dining Rewards when they sign the deal, and then pays Dining Rewards it's share as the food is sold. The advantage to the restaurant is both that Dining Rewards pays for the additional advertising to help bring more customers, and gives the restaurant an up-front payment.

As for restaurants dropping out of the program, that is automatic. Since the restaurant is fronted part of the money, the amount is "fixed", and the restaurant automatically drops out upon reaching that limit. It then needs to sign another deal with Dining Rewards to re-enter the program (and a restaurant wanting some extra cash up front for a project can be a good reason for them). In the case of the five restaurant "chain", they assigned a different amount to each restaurant (depending on their normal rate of business and approximating reaching their "goals" at the same time), and when each crossed their "limit", the program automatically posted that location was dropping out of the program. I just happened to notice it happening to a couple at the same time.

So, every restaurant you use for these rewards will eventually drop out of the program. When it does, I guess it wouldn't hurt to try to encourage their management to re-up for it.

Very interesting. Not entirely consistent with the thread we saw about a lawsuit which seems to say that they charge usurious interest.

Interesting info there Steve32 -- but I'll admit to being a bit confused by the way you did the math.

So, for my $20 lunch tab, RN takes $5 and kicks back $5 to the restaurant? Who gets the other $10 -- the RN 'loan officer'?

I'll assume by "cost of food sold to members" you really mean "check/tab/bill paid by card". "Cost" would usually imply "raw materials" -- ie, bread, before becoming part of your sandwich
Or is RN also in the wholesale grocer crime-syndicate ??

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I was unclear if the 25% and 50% he was using was of total cost for food, or from the profit margin. I didn't want to grill him on the mechanics as it's my understanding that businesses generally don't like to explain the real profit margins and how they calculate what they will price things at to other people, and I typed it out a day and a half after the chat--so "to the best of my recollection."

And what about the % of the tax and tip.