In 1921, the U.S. tax code made eating with a client a deductible expense.
The business lunch as a formal category emerged in the United States during the 1920s, when expanding corporations required executives to entertain clients, negotiate deals, and build relationships outside the office.1 Restaurants in financial districts began offering lunch menus designed for speed and professional conversation, replacing the leisurely midday meals of an earlier era.
The practice received institutional support when the U.S. tax code began allowing deductions for business-related meals. The Revenue Act of 1921 opened the door for companies to treat dining expenses as a cost of doing business.2
The three-martini lunch became a symbol of mid-twentieth-century corporate culture, particularly in advertising and finance. Executives spent hours at restaurants, with the tab covered by their employers and partially subsidized by the government through tax deductions. President Jimmy Carter campaigned against the practice in 1976, calling the three-martini lunch a tax shelter for the wealthy.3
Congress reduced the deduction from 100 percent to 80 percent in 1986, and to 50 percent in 1993. The gradual tightening reflected growing skepticism about the line between legitimate business activity and subsidized leisure.
The format varied dramatically across cultures. The French déjeuner d'affaires typically lasted two hours and involved multiple courses. Japanese business dining followed strict hierarchical protocols about seating and ordering. In many countries, the most important negotiations happened over food, not across a conference table.
During the COVID-19 pandemic, the business lunch briefly disappeared. When it returned, the format had shortened. The two-hour meal had often been replaced by a 45-minute meeting over coffee. The tax deduction for business meals was temporarily restored to 100 percent in 2021 and 2022 before reverting to 50 percent in 2023.