Gift cards have always been a valuable source of revenue for restaurants. But with the current inflation trend, gift cards have become even more valuable. Not only are they an easy way to keep money and customers coming in, but they represent immediate revenue and future business – all of which can help restaurants compete more effectively in uncertain times.
How your restaurant can counter inflation with a gift card program
Gift cards have consistently ranked as the most popular holiday gift in the United States. Last year, the US Gift Card Market was estimated to be worth $162.11 billion in 2022 and is and is predicted to reach $1.4 trillion by 2026. Digital gift cards currently making up 11% of the market and is expected to grow at more than twice the rate of the market as a whole.
The restaurant industry is one of the larger platforms that can benefit from a well-run gift card program – and a recent survey by the National Restaurant Association survey validates consumers’ desires to have and use gift cards. Despite the pandemic and all that is going on, 42% of consumers planned to give a restaurant gift card to someone during the holidays, and 62% said they’d like to receive gift cards as a holiday present. Of that group, 63% indicated they’d like the gift card to be to their favorite restaurant. Commenting on the report at the time, Hudson Riehle, the association’s senior vice president of research said, “Restaurant gift cards have always been an important component driving sales over the holiday period and beyond…Right now, they’re even more critical to operators. Consumers have always welcomed them, and their availability can nudge diners into the decision to not only seek a restaurant meal solution, but also to patronize a specific brand or operation.”
All in all, this is great news for business owners given that gift cards provide significant additional benefits at a time when they are most needed – such as;
- Immediate revenue lift and promise of future business: One of the biggest and obvious advantages of selling restaurant gift cards is that you generate revenue immediately. The gift card purchaser buys the card upfront. Similarly, when a customer purchases a gift card from your restaurant, they essentially pre-pay for a future purchase – and when you’re struggling to make ends meet and aren’t sure if you can afford to pay your staff, this is the exact promise you need. But regardless of inflation or current circumstances, gift card sales are ideal to secure some additional liquidity and improve cash flow. This is particular true for the upcoming festive season where your resources might be stretched with money tied up in stock, extra staffing costs, marketing, logistics costs and more.
- Higher revenue and increased sales: Most customers who pay with a gift card will end up spending more than their gift card is worth – up to 80% more! A study by First Data showed that the average redemption sale exceeds the value of the gift card by an average of $59 dollars. According to the same survey, this overspending is most profound when the gift cards were purchased for dining and fast-casual restaurants. Likewise, on occasions where only a few dollars remain on the card – regardless of your establishment, customers will likely return to use them up (sometimes over multiple visits) and will purchase more than the few dollars they have left.
- Increased loyalty and new business: Gift cards are the ultimate driver of customer loyalty – and of the most cost-effective ways to spread brand awareness. They help bring old customers back to your business and encourage new ones to visit you for the very first time. Many customers give gift cards to friends and family as a means of introducing them to establishments they themselves favor. As a result, gift cards are a form of complimentary advertising that brings in new customers. Without gift cards, new customers might never have visited your establishment. In fact, 44% of consumers said that gift cards encourage them to try new restaurants that they would not have otherwise visited. Word-of mouth is one of the most powerful ways to advertise, and having gift cards available for purchase will do just that.
- Repeatable success: Once your gift card program has been set up and integrated into your offering, there is minimal maintenance required, and your gift cards have an infinite shelf-life. Yes, businesses can make as much as 80% of their annual gift cards sales in November and December alone but gift cards can be purchased all year round for birthdays, anniversaries, weddings and other celebrations as well as and offering a promotional opportunity for other holidays such as Mother’s Day and Valentine’s Day. So, while the holidays are traditionally or typically the most popular time for gift card purchases don’t discount the rest of the year to promote and sell gift cards, and in the process gain a much-needed source of revenue.
Gift Cards: A low-cost marketing tool that can help any size restaurant
Gift cards are a go-to for consumers. They take the stress out of last-minute holiday shopping and provide an alternative option to gifting cash. They are extremely convenient for those who purchase and redeem them, and they also yield benefits to restaurateurs themselves. They are easy and affordable to implement; they are a low-cost marketing tool that can help any size restaurant boost sales, order values and profit margins, and even improve loyalty.
If you currently do not have a gift card program in place, there’s no better time than the present to start. It might be part of what gets you through this crisis. While are the holidays are fast approaching, physical gift cards will not be option but that doesn’t mean you should rule them out altogether. With your restaurant POS system, providing e-gift cards and facilitating gift card transactions is easy to set- up and will take just minutes.
Contact us today to find out how you can benefit from offering gift cards at your establishment.