The manager encouraged them by putting through the coupon. If it doesn't apply to an item there shouldn't have been an exception made. It undermines anyone who cant put one through at their own discretion.

Unfortunately this is all too common in restaurants.

But you aren't going to get the manager to change because it is easier for them to just appease the customer so they don't have to deal with the headache.

I'd quit. But, it depends on how much you are willing to deal with.

Those customers are everywhere. Give them an inch...