How do you split coupons when paying a restaurant bill?

It’s Friday night and you’re out to dinner with your friends. You are ready to split the bill, and you offer up a coupon to save money.

How should the coupon affect how much you pay? Should the coupon reduce the entire group bill, or should the coupon reduce only how much you pay?

In social situations, the answers are not always easy. They depend both on the economics of fair division and on the etiquette of dining out.

I describe a few scenarios below and give my answers. These are just suggestions and not rules. Feel free to tell your stories and opinions in the comments.

One general point: however you split the coupon, remember to leave a tip based on the full tab, before the coupon discount. Servers should not be penalized because you got a good deal.

Anyway, let’s consider a few situations.

I want to expand on a few items posed in this Yahoo answers post.

Situation 1: voucher / gift card

If you owe $25, but you have a $10 gift card, then I think it’s fair that you pay $15 + the gift card.

Basically, the gift card or voucher should be treated like cash. It is yours and should reduce your bill.

If you are worried someone in the group might object, you can dodge the issue by getting a separate check. Then you can use the gift card for yourself without worry.

Situation 2: free appetizer or dessert

If you order an appetizer or dessert for yourself, then the coupon should reduce how much you owe. If anyone disagrees, you can always get your bill on a separate tab and use the coupon without hassle.

What if you share the item with the table? Do you get any money back? Say your coupon saved $8 for a group of four. That is like saving each person $2. You could make the argument that everyone was willing to pay for the appetizer–not knowing about the coupon–and so your coupon should entitle you to some of the surplus, like a couple of bucks.

This is economically sound, but it goes against common courtesy. Others may resent that you are profiting from a coupon as opposed to breaking even, which would be the case if you got a separate tab.

So perhaps the reasonable thing to do is to share the coupon and let everyone benefit from getting free food. People will be happy you got them a deal, and that’s probably worth more than a couple of dollars anyway.

Situation 3: buy one entree, get one free (equal or lesser value)

This is a trickier situation than the ones above. The issue is that you cannot simply get a separate tab and use the coupon for your meal. You need at least one other person to make the coupon valid, which means you will likely have to share the savings.

How should the savings be split? It depends on what was ordered.

Case A: Two diners, equal cost
Consider a party of two where each diner orders a $6 burrito.

Normally, the bill would come to $12 and each would pay half. But with the coupon, the bill comes to $6. How much should each diner pay?

The person with the coupon might argue that he owes nothing (except the tip). The other person was going to pay $6 anyway, and so his coupon pays for his share of the meal.

The reason this may not work is the other person has leverage. If he feels this is unfair, he could ask the bill be put into separate tabs. Now the coupon is unusable and both parties have to pay $6.

Those familiar with game theory will recognize this is an example of the ultimatum game. The ultimatum game is this: from a stash of free money, one person offers a split to the other. If the deal is accepted, then each player gets his split. If the second player rejects, then both go home with nothing.

For the diners, the coupon creates a surplus of $6 to be split. The person who brought the coupon offers some split of that money to the other diner. But this deal has to be accepted before the split happens. If the other diner rejects, he could ask for separate checks and both have to pay full price, destroying the surplus.

So what division is fair? It depends on who is playing. In an experiment where kids played the ultimatum game, offers too greedy and far away from a 50/50 split were routinely rejected. A split like 60/40 would be okay–it gives some compensation to the proposer without being too unfair.

To pay the $6 bill, the diners might agree on something similar. An even split would be $3 to each person. Or the person with the coupon could pay a little bit less–like the coupon holder pays $2 and the other person pays $4.

And it’s worth mentioning again: however they split the bill, they should both pay a tip based on a $12 order. Perhaps both people add one dollar as a tip.

(Arguments may arise here too about how to split the tip. I feel both parties should pay the same tip, as they both received the same service)

Case B: Two diners, unequal cost

Say one person ordered a $10 meal, and the other person ordered a $8 meal but had the coupon. How to split this up?

With the coupon, the bill comes to $10. If you simply split the bill, then both people pay $5. That seems unfair to the person who only ordered the $8 entree. He has to pay $5 for his $8 entree–so he did not even get 50 percent off of his tab.

I think the fair split is to share the savings. The coupon saved $8 in total, so that means each person pays $4 less. The person with the coupon pays $4 for his contribution and the other person pays $6.

Note: the same solution applies if the person with the $10 entree had the coupon. Usually these coupons state the free item must be of equal or lesser value. So again the coupon creates an $8 surplus, which should be split roughly evenly.

Case C: more than 2 diners

Buy one, get one free is not a coupon I would use in a tab with many people.

I think the best solution is to find one other diner in advance and get a separate tab.

Then the situation reduces to case A and case B which are already solved.

Situation 4: get $10 off a $50 check, or similar

This is the most complex situation, as you often need multiple people for the coupon to be valid.

For instance, suppose three friends order items worth $15, $15, and $20. This totals $50, and thus every person is needed to meet the minimum and make the coupon valid.

The coupon creates a savings of $10 which is to be split by three people. In theory, you could use any of the methods of fair division to divide up the savings, like a proportional division based on what people ordered.

But in practice, any split of the savings has to be agreed upon by all parties. Every single person has veto power–anyone unhappy could ask for the table to have separate checks and destroy the savings.

So the reality is the $10 savings are probably going to be split pretty evenly amongst all the diners.

Conclusion

Coupons are a great way to save on food, but it is not always easy to use them and split the savings.

It is important to use coupons with courtesy, especially to ensure dining out is a pleasant experience for all.

So my tips are:

–If you have a gift card or free appetizer, just get a separate tab and use the coupon for yourself. It will avoid any awkwardness of people who want to start arguments

–If you have a “buy one, get one free,” then talk to someone in advance about getting a separate tab. Split the savings roughly evenly

–If you have a $10 off a $50 bill, or similar coupon, then it depends on your order. If you can manage with just one other person, then get a separate tab and use the coupon. Otherwise, just let the coupon reduce the total bill for everyone.

What are your thoughts on coupons and splitting up the savings?