Question

In class, we considered the case of a restaurant owner who needed to have the windows cleaned. one approach discussed was for the owner to offer the window cleaner "gift certificates" to the restaurant which are equal to the amount the cleaner would charge. so if the window washing bill was $200, the restaurant owner would provide a $200 gift certificate to the restaurant to pay the bill. why would the restaurant owner want to pay in this way?

Answer 1

If the owner pays the cleaner $200, the cleaner can take this money and use it anywhere. However, if the owner pays the cleaner with a $200 gift certificate to the restaurant, he/she would ensure that this money would be coming back into the restaurant. Additionally, because the actual cost of a meal is only about 1/3 the total cost of the bill, the owner would actually be making money off of the certificate.