Securing Sales with Restaurant Gift Cards
We’ve all heard of the “gift that keeps on giving,” and that’s just what a gift card is right now for your favorite restaurant. Gift cards work for any occasion graduations, holidays, promotions, congratulations, well wishes, and apologies- to name a few. On the restaurant side, gift cards create another stream of revenue. As we’re in the midst of a pandemic that’s wreaking havoc on the restaurant industry, what can restaurants do to help keep the lights on? One answer (of many) is gift cards. Welcome to our guide to restaurant gift cards!
Facts & Figures: Gift Card Demographics
In 2014, businesses across all industries sold $124 billion in gift cards. National full-service restaurant chains and fast-casuals lead these gift card sales. So, who buys restaurant gift cards, and how are they purchasing them?
Digital gift cards rank as the most popular gift card option. CardCash’s website reports millennials are more likely to purchase or receive digital gift cards than people over 35 years old. Unsurprisingly, if a customer’s income is higher, they are more likely to buy restaurant gift cards for someone else than to receive one.
Your restaurant audience isn’t specific to these groups or these figures, so depending on where you market them, your gift cards can reach a broad audience. Let’s look at how you can start your restaurant’s gift card program.
Creating a Restaurant Gift Card Program
Like a customer loyalty program, there are a few steps you need to pull off your gift card strategy. When it comes to implementing a gift card program, consider employing a few of the following best practices.
Consider the Type of Gift Card
There are two types of gift cards, closed and open-loop gift cards. Guests can only use closed-loop gift cards at your restaurant. Open-loop gift cards are multi-purpose gift cards that they can use at various businesses. There are two examples of open-loop gift cards: the gift cards guests can use at restaurants (pictured on the gift card, sometimes in a restaurant group); or the Visa gift cards offered in grocery stores, which guests can use anywhere that accepts Visa.
Of course, there are benefits to offering either gift card type. Closed-loop gift cards make people visit your restaurant because that’s the only place they can be redeemed. Open-loop gift cards give your customers more freedom to decide where they want to redeem their gift cards. There’s less of a chance that they will redeem the gift card at your restaurant, and there’s also less of a chance that the gift card will initially be purchased at your restaurant.
Getting Your Program Started
How can you initiate your gift card program? You have many options. Decide on goals, needs, and technology available to implement your restaurant gift cards program.
Offer the Program Through Your Point of Sale
When you utilize your point-of-sale, you allow for more efficient methods of processing payments and for tracking sales. Check with your Point-of-Sale (POS) provider to make sure that your system can support a gift card program or if it’s an add-on. Results may vary depending on which POS provider your restaurant uses. You can check out this list of POS systems with gift card programs to see if this option will work for your restaurant.
Third-Party Restaurant Gift Cards Software
Again, make sure your POS integrates with this third-party software or allows you to sync information from the software to your POS. For this option, clarify whether the integration will cost your restaurant.
Independent Third-Party Company
Going with a third party is the most challenging solution because some companies may need to customize the software based on your needs. You’ll need to create a separate process that lets you complete gift card transactions.
E-Gift Card App
With an e-gift card app, there’s no need to integrate with your POS. With this option, the app can run through your mobile device. You can sell gift cards online. Depending on the app, you can scan codes from your customers’ phones or generate a code that can be entered into your POS as a credit card number to be redeemed in your restaurant for off-premise purposes.
When promoting your restaurant gift cards, consider offering e-gift cards that are redeemable with a code that can be used when walk-in traffic is once again allowed. Remember, grocery stores are an excellent place for people to see your restaurant’s gift card. Need a little more advice when it comes to promotion? ShopKeep has some tips and tricks you can use to your advantage!
How Gift Cards Can Help
First, let’s start with the good news. Restaurant gift cards are low-maintenance products that generate income and, in many cases, never expire. If you’re not convinced, these benefits may help:
- Guaranteed Revenue: People pay for gift cards upfront; therefore, your profit is immediate.
- Potential Customers: If someone receives a gift card from your restaurant, but has never visited, your gift card gives them a reason to try your food. (Bonus: The person that gave them the gift card recommended your restaurant to this new person. So, reference + new customer!)
- No expiration: Treat gift cards as you would cash. They don’t expire and should be able to be used at any time.
- Seasonality doesn’t apply: Restaurant gift cards aren’t seasonal. They can (and should) be used throughout the year.
- Increases brand awareness: With your restaurant’s name and information, it helps spread brand awareness and brand recognition for your restaurant.
- Potential for Bigger Checks: When people have gift cards, they’re more likely to purchase more items from your restaurant. Because it’s technically not their money, depending on the amount, they’re more likely to try appetizers, drinks, and desserts when they usually wouldn’t. (According to FSR Magazine, 72 percent of customers that visit your restaurant to redeem gift cards will spend more than the amount of the card. Gift cards are responsible for a 15 to 35 percent increase in ticket size.)
- Doesn’t affect menu prices: Gift cards are different from coupons. They don’t change the price of items on your menu but can be used to pay at the end of the meal.
Tips and Tricks: Specifically the Don’ts
Jump into the gift card game, but take some time to check out these tips to put your best strategy forward:
- Use amount increments: Consider the price of a menu item or an entire meal and use those as incremental guidelines. If the gift card doesn’t cover the whole amount of a guest’s check, your restaurant will make a profit due to the difference. Additionally, if there is money left on the gift card, the remaining amount may inspire a return visit to redeem.
- Don’t set expiration dates: We mentioned this in the benefits, but your gift cards shouldn’t expire. Customers receive gift cards, but they might not redeem them right away. There’s no reason to miss out on an opportunity for a new customer to visit your restaurant, just because they missed the expiration date!
- Keep designs generic, not seasonal: Holiday and season-specific designs may imply that the gift card is only valid during that time. Keep your design generic using your restaurant’s logo and contact information, and not only will your customer develop brand awareness, but will be able to use it year-round.
- Upsell, upsell, upsell: Gift cards are also a great way to create bigger checks for first-time customers. We’re talking about suggesting as the check is received or even in general conversation if visitors are out-of-town. It doesn’t hurt to make the suggestion.
Who Doesn’t Love Gift Cards?
Once again, restaurant gift cards are an excellent way for restaurants to create another profit avenue. During these times, why not offer customers a reason to visit your restaurant once restaurants open for our “new normal?” Buying gift cards not only help support customers’ favorite food spots but almost guarantees a visit from a returning customer or someone new. As restaurant leadership, gift cards work in your favor. For guests, gift cards are the perfect gift to give and receive. They provide the recipient the freedom to make their own decisions but feel personalized enough to gift for multiple occasions. As we return to normalcy, numerous streams of income can only help.
Want to get the scoop on everything restaurant tech, marketing, industry news, and more? We got you covered. Subscribe to our award-winning blog to get weekly updates on the most buzzworthy restaurant industry topics.
About the Author
Devyn Nance is the Marketing Coordinator at QSR Automations. She graduated from the University of Louisville with a bachelor’s degree in Communication and from Loyola University Chicago with a master’s degree in Global Strategic Communication. She considers herself an (amateur) profiler – trained solely from watching every episode of Criminal Minds. Outside of work, Devyn loves to shop, travel, hang out with friends and family, read, and watch shows on various streaming platforms.