Updated: December 28, 2013 at 3:08 pm
When a restaurant goes out of business, gift card holders are often out of luck.
That's what diners who bought gift cards from My Big Fat Greek Restaurant in Colorado Springs are learning.
The restaurant, which opened in August 2011 at 7605 N. Academy Blvd., closed Sunday night. A note left on the restaurant door by one of its owners, an Arizona businessman, thanked customers for their patronage but offered no clue as to whether they could get reimbursed for their gift cards.
But customers probably have little recourse, said Matt Barrett, CEO and executive director of the Better Business Bureau of Southern Colorado.
Generally speaking, customers holding gift cards could redeem them at another location if the failed restaurant is part of a regional or national chain, Barrett said. For example, Olive Garden, Red Lobster and a few other restaurant brands are under the umbrella of a single ownership.
"If one goes down, you can certainly use your gift card at another restaurant," Barrett said.
But My Big Fat Greek Restaurant was run by a franchisee, who operated at least three similar restaurants in southern Arizona that have closed, according to a Tucson, Ariz., newspaper.
If a restaurant's owners file for Chapter 11 bankruptcy protection, a lengthy list of creditors - such as landlords, vendors and contractors - would seek to be paid off first, Barrett said. Customers with $20 gift cards probably would be last in line and at best could hope for pennies on the dollar, he said.
No bankruptcy filing was found in a Gazette search of online court records for the owners of My Big Fat Greek Restaurant.
Even if the restaurant's owners hadn't filed for bankruptcy protection, they likely would be required by government agencies to pay employee wages before they could reimburse customers holding gift cards, Barrett added.
One former My Big Fat Greek Restaurant employee, who asked not to be identified, told The Gazette that about 30 workers lost jobs when the restaurant closed. They learned Saturday evening the restaurant would shut the next day, the employee said.
Workers were told they could pick up paychecks Friday at the restaurant for the first half of December; their paycheck for the second half of the month would be mailed to them, the employee said.
If money is left after employees are paid, restaurants typically pay vendors next, he said. Vendors would be more likely to take a failed business to court, he said.
Barrett said he has heard of instances in which failed businesses offer to exchange gift cards or make cash refunds. Ryan Field,, one of My Big Fat Greek Restaurant's three owners, has not returned several calls to comment on what happened to the restaurant and whether gift card holders would be compensated.
Customers who used a credit card to buy their gift cards from My Big Fat Greek Restaurant can call their credit card provider and challenge the charge, Barrett said.
"In this situation, you could contest the charge and say, 'I paid for it but never got the services that I paid for.'?"
But there's no guarantee the credit card provider would disallow the charge and absorb the cost of the gift card, he said.
"It's not a sure thing, but it's certainly a step in the right direction," Barrett said.
Chuck and Peggy Adams of Colorado Springs took turns the past two Christmases buying gift cards for each other from My Big Fat Greek Restaurant; last year, Peggy bought $60 worth of cards for Chuck, and this year, he returned the favor to his wife.
The couple usually stopped at My Big Fat Greek Restaurant twice a month for lunch while they shopped on North Academy Boulevard. Adams said he was frustrated over the restaurant's unannounced closing; the couple had $20 to $25 left on last year's gift cards and all of this year's $60.
Although they were upset over their loss, Adams said the restaurant's employees are worse off.
"I hurt for them," Adams said.