A customer purchases two cocktails which entitles her to four cocktails. She also partakes in the complimentary buffet. XYZ Restaurant provides free meals to the owner's children after they get out of school. The use of the food is not exempt from use tax because the food is used for a purpose unrelated to the restaurant business. Lodging facilities are not reselling complimentary food or beverages they provide to lodgers.
Lodging facilities provide a service and consume the items provided to their customers.
Therefore, vendors selling to lodging facilities must pay transaction privilege tax on the items sold. AllSuites Hotel provides complimentary breakfasts to its customers. The breakfast is purchased from a caterer which brings the food items to the lobby of the hotel. The same caterer provides the beverages and food items served during the social hour. The caterer must pay transaction privilege tax under the restaurant classification on the gross receipts from the transactions.