In 2024, restaurant gift card programs are no longer just a nice-to-have; they’re a must-have for business owners looking to boost sales, attract new customers, and foster loyalty.
With the right strategies in place, gift cards can be a powerful tool to:
Increase average order value and drive higher overall sales
Expose your restaurant to new potential customers through gift-giving
Provide an immediate cash infusion and improve liquidity
Reduce marketing costs while achieving a higher ROI
In this comprehensive guide, we’ll dive into 17 key benefits of implementing a specific restaurant gift card program and best practices to maximize your ROI and stay ahead of the competition in 2024.
Global Gift Card Market
The global gift card market is expected to post a CAGR of more than 13% between 2019-2023
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Boost Sales and Customer Loyalty with a Restaurant Gift Card Program
Increase average order value and drive higher sales per customer visit
Attract new customers through gift-giving without additional marketing costs
Encourage repeat visits and build long-term customer loyalty
Increase Average Order Value
Gift card holders tend to spend more than the value of their card when dining at your restaurant. This phenomenon occurs because customers often view gift cards as “free money” or a special treat, leading them to splurge on premium menu items, appetizers, desserts, or beverages they might not normally purchase. According to the National Restaurant Association, restaurant industry sales in 2023 reached $1.049 trillion, up from $966 billion in 2022. Furthermore, gift cards encourage customers to treat themselves to a memorable dining experience. They may opt for higher-priced entrees, add extra sides, or indulge in a bottle of wine, knowing that a portion of their bill is already covered. This psychological effect drives higher overall sales per customer visit, ultimately increasing your restaurant’s revenue.
Having a successful gift card program also opens up opportunities for your staff to upsell during the ordering process. You can train your servers to suggest popular appetizers, premium additions, or specialty drinks to gift cardholders, as they may be more receptive to these recommendations. By strategically upselling, you can further increase the average order value and maximize the impact of your gift card program on your bottom line.
Restaurant Gift Card Statistics
81% of consumers with a gift card to a fast-casual restaurant reported spending beyond the original value of their gift cards, spending an additional $20 on average
Attract New Customers Through Gift-Giving
Gift cards serve as a powerful tool for attracting new customers to your restaurant. When your existing customers purchase gift cards for friends, family members, or colleagues, they provide a personal recommendation for your establishment. The recipients, who may not have visited your restaurant before, are now motivated to do so, as they have a prepaid incentive to try out your offerings. Curious about optimizing the value of diner endorsements to captivate more patrons? Discover strategies for using restaurant critiques effectively to expand your clientele and boost your establishment’s popularity.
This exposure to new potential customers through gift-giving is particularly valuable, as it expands your customer base without requiring additional marketing costs. The gift card acts as a targeted advertisement, reaching individuals who are likely to appreciate your specific restaurant’s cuisine and atmosphere, based on the giver’s knowledge of their preferences.
Motivation of Gift Cards
44% of consumers have expressed that gift cards motivate them to explore new restaurants they may not have considered otherwise
Drive Repeat Visits and Build Customer Loyalty
Implementing a restaurant gift card program not only attracts new customers but also encourages repeat visits from existing patrons. When customers have a positive experience at your establishment and receive a gift card, they are more likely to return to redeem the card’s value. This return visit provides guests an opportunity to reinforce their positive perception of your restaurant and create a lasting connection.
By consistently delivering high-quality food, attentive service, and a welcoming ambiance, you can transform these repeat visits into long-term customer loyalty. Loyal customers are invaluable to your restaurant’s success, as they tend to spend more, visit more frequently, and act as brand advocates, recommending your establishment to others.
To further enhance customer loyalty, consider integrating your gift card program with a loyalty rewards system. You can offer points or rewards for gift card purchases, incentivizing customers to buy more redeemed gift cards and increasing the likelihood of repeat visits. You can also use the data collected from your gift card program to personalize marketing efforts, such as sending targeted promotions or special offers to frequent gift card purchasers or users.
Gift cards also help foster emotional connections between your customers and your restaurant. When a customer associates your establishment with a thoughtful gift, a celebratory occasion, or a memorable dining experience, they develop a stronger emotional bond with your brand. This emotional connection can lead to increased loyalty, as customers are more likely to choose your restaurant over competitors when they have a positive emotional association. Harness the power of restaurant social media marketing strategies to share your unique gift card offerings, further strengthening the emotional bonds with your customers and propelling your establishment to new heights.
By using special occasions, offering gift cards, and creating positive experiences for both the giver and the recipient, you can cultivate a loyal customer base that feels connected to your restaurant on a deeper level. This emotional connection can translate into long-term success, as emotionally engaged customers are more likely to remain loyal, even in the face of increased competition or economic challenges.
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Enhance Cash Flow and Revenue with Gift Card Sales
Immediate Cash Infusion
Gift card sales provide restaurants with an immediate cash infusion. When customers purchase gift cards, the funds are available for use right away, even before the card is redeemed. This upfront cash can significantly improve a restaurant’s liquidity, providing a buffer during slower periods or allowing more flexibility for investments in growth opportunities.
By selling gift cards, restaurants are made money by essentially selling future meals. This allows for better financial planning and cash flow management. The funds from gift card sales can be used to cover operational expenses such as rent, payroll, and inventory, or invested in marketing campaigns, equipment upgrades, or expansion projects.
Breakage: Unredeemed Gift Card Revenue
A significant benefit of gift card sales is the concept of “breakage” – the dollar portion of gift cards that go unredeemed. While redemption rates vary by industry and business, it’s estimated that between 5-10% of gift cards are never used. For restaurants, this unredeemed value becomes pure profit.
However, it’s crucial for restaurants to properly account for and manage breakage. Unclaimed property laws vary by state, and businesses may be required to turn over unused gift card funds to the state after a certain period. Restaurants should work with their accounting teams to ensure compliance with these regulations.
Increased Transaction Values and Repeat Business
Gift cards not only provide immediate cash flow and breakage revenue, but they also tend to drive higher transaction values and repeat business. Studies have shown that customers with gift cards often spend more than the card’s value, providing a boost to average check sizes.
A study by payment from First Data found that 72% of customers shopping with a gift card spend more than the card’s value, with an average overspend of 20%. For restaurants, this means that a $50 gift card could result in a $60 check on average.
Moreover, gift cards can bring in new customers who may not have otherwise visited the restaurant. If they have a positive experience, they’re likely to return and become repeat customers. Gift cards can also encourage existing customers to visit more frequently, driving repeat business and customer loyalty.
Restaurants can further capitalize on gift card sales by using them as a tool for upselling, promotions and cross-selling. When customers purchase gift cards, staff can suggest adding on a small denomination card as a “gift for themselves.” This tactic not only increases the total sale but also encourages the customer to return and use their bonus card.
Gift cards and restaurant vouchers can also be used to promote the sale of higher-margin menu items or special offerings. For example, a restaurant could offer a $10 bonus card with the purchase of a $50 gift card, with the bonus card valid only for appetizers or desserts. This incentivizes customers to purchase the gift card and drives incremental sales of profitable menu items.
By leveraging the immediate cash flow of immediate revenue, breakage revenue, and increased transaction values driven by gift card sales, restaurants can significantly enhance their revenue and profitability. Effective gift card program management and creative marketing strategies can help maximize these immediate revenue benefits and drive long-term success.
Simplify Marketing Efforts and Reduce Costs
Gift cards offer a unique opportunity for restaurants to simplify their marketing efforts while reducing overall costs. By leveraging the power of gift cards, restaurant owners can attract new customers, run promotions, and partner with local businesses more efficiently. Discover effective restaurant promotion methods and increase your customer base with our guide on utilizing gift cards to maximize your marketing impact.
Cost-Effective Customer Acquisition
Gift cards act as mini-billboards for your restaurant, promoting your brand wherever they go. When a customer purchases a gift card, they are essentially buying a small advertisement for your establishment. The recipient of the gift card becomes a new customer at no additional marketing cost to you.
This organic form of word-of-mouth marketing is incredibly valuable. People trust recommendations and tips from friends and family more than traditional advertising. When someone receives a gift card, they are more likely to visit your restaurant and potentially become a regular customer.
Compared to paying for traditional advertising methods, such as print ads, radio spots, or online campaigns, gift cards offer a higher return on investment (ROI). According to a study by the National Restaurant Association, gift cards have an average ROI of 2:1 compared to traditional advertising methods. You only pay for the production and distribution of the gift cards, which is a one-time cost. The marketing benefits continue as long as the gift cards are in circulation.
Customers With Restaurant Gift Cards
35% of customers redeem restaurant gift cards within a week, while 21% do so within a month
Maximize ROI with Gift Card Program Best Practices
Implementing a restaurant gift card program is an excellent way to increase revenue and attract new customers. However, to truly maximize the return on investment (ROI) of your successful gift card program alone, it’s essential to follow best practices that have been proven effective in the industry.
Adopting these strategies can optimize your gift card program’s performance, drive higher sales, and foster long-term customer loyalty. Let’s explore the key best practices that will help you achieve these goals and unlock the full potential of your restaurant gift card program.
Set Clear Terms and Conditions
Establishing clear and transparent terms and conditions for your gift card program is crucial for building trust with your customers and avoiding potential misunderstandings. Take the time to develop straightforward policies regarding expiration dates, fees, and usage restrictions, if any.
Communicate these terms clearly to your customers, both on the gift cards themselves and through various marketing channels, such as your website, social media, and in-store signage. This transparency will help customers understand exactly what they’re purchasing and how they can use their gift cards, reducing confusion and potential frustration.
It’s essential to familiarize yourself with the gift card laws and regulations in your area, as these can vary by state or country. Some jurisdictions may have specific requirements regarding expiration dates, fees, or disclosures that you must adhere to. For instance, some states have laws that prohibit expiration dates on gift cards, while others allow them under certain conditions.
By ensuring compliance with these regulations, you can protect your business from potential legal issues and maintain a positive reputation among your customers.
Leverage Data for Targeted Marketing
One of the most powerful aspects of a gift card program is the wealth of data it generates. By analyzing gift card sales data, you can identify trends, preferences, and opportunities that can inform your marketing strategies and help you drive higher sales.
Segment your customers based on their purchase behavior across various channels, such as the frequency and value of their gift card purchases. This segmentation allows you to create targeted marketing campaigns across various channels that speak directly to each group’s unique interests and motivations.
Personalization is key to capturing your customers’ attention and encouraging them to purchase gift cards. Use the data you’ve collected to tailor your marketing messages, promotions, and offers to specific customer segments. For example, you might offer a special bonus or discount to customers who have purchased gift cards in the past, encouraging them to buy again. Or, you could create a sense of urgency by promoting limited-time offers or seasonal or promote gift cards or card designs that appeal to specific customer groups.
Continuously Monitor and Optimize Your Program
To maximize the ROI of your restaurant gift card program, it’s crucial to continuously monitor its performance and make data-driven decisions to optimize its effectiveness. Regularly review key metrics, such as gift card sales volume, redemption rates, and customer feedback, to identify areas for improvement.
By staying attuned to these metrics, you can quickly spot trends or issues that may be impacting your program’s success. For example, if you notice a decline in gift card sales during a particular period, you can investigate the underlying causes and adjust your marketing strategy accordingly.
As customer preferences and market trends evolve, it’s essential to adapt your gift card program to stay relevant and competitive. Regularly assess your program’s features, design, and promotional offerings to ensure they align with your customer’s changing needs and expectations. This might involve introducing new gift card designs that reflect current trends, offering more digital gift cards or card options to cater to tech-savvy customers, or partnering with other local businesses to create unique gift card bundles that provide added value.
What is a Restaurant Gift Card Program?
Definition and Overview
A restaurant gift card program is a system that enables restaurants to sell and manage gift cards for their establishments. Customers can purchase these cards as gifts for friends, family, or colleagues, or for personal use. The cards, which can be physical or digital, are loaded with a specific monetary value that can be redeemed for food and drinks at the restaurant.
Gift card programs have become increasingly popular among restaurants of all sizes, from small independent eateries to large chain establishments. They provide a convenient way for customers to give the gift of a meal or dining experience to a loved one without having to worry about selecting a specific menu item or dealing with dietary restrictions. Elevate your restaurant’s marketing approach and entice more patrons by integrating effective gift card strategies that enhance customer experience and loyalty.
Types of Restaurant Gift Cards
Physical Gift Cards
Physical gift cards are the most common type of restaurant gift card. These cards are typically made of plastic and can be customized with the specific restaurant’s branding, logo, and design. They are pre-loaded with a specific monetary value, which can range from a small amount for a single meal to a larger sum that covers multiple visits.
Customers can purchase physical gift cards directly from the restaurant, either in person or online. Some restaurants also sell their gift cards through third-party retailers, such as grocery stores or gift card kiosks. Once purchased, the recipient can use remaining balance on the card to pay for their meal by presenting it to the server or cashier, who will swipe the card and deduct the appropriate amount from the balance.
Digital or E-Gift Cards
Digital or e-gift cards have gained popularity in recent years, particularly among younger consumers who prefer the convenience of mobile payments. These cards are delivered electronically, typically via email or a mobile app, and can be redeemed online using a unique code or barcode.
Digital restaurant gift cards offer several advantages over physical cards. They are more environmentally friendly, as they do not require the production of plastic cards. They are also easier to distribute and manage, as restaurants can track and analyze usage data in real time. Additionally, digital restaurant gift cards can be purchased and delivered instantly, making them an ideal choice for last-minute gifts or spontaneous dining decisions.
Reloadable Gift Cards
Some restaurants offer reloadable gift cards, which allow customers to add funds to their card balances over time. This type of card can be an effective way to encourage repeat visits and build customer loyalty, as customers are more likely to return to a restaurant where they have an existing balance.
Reloadable gift cards can be physical or digital, and customers can typically add funds online, through a mobile app, or in person at the restaurant. Some restaurants may offer incentives for reloading redeem gift cards, such as bonus funds or discounts on future purchases.
Benefits of Gift Cards for Small Business Restaurants
Level the Playing Field with Large Chains
Gift card programs provide small business restaurants with a powerful tool to compete with larger chains. By offering gift cards, your restaurant can project a professional and established image, attracting customers who value the convenience and flexibility of gift cards. This levels the playing field, allowing your small business to tap into the same customer base as larger competitors. Elevate your restaurant’s brand identity with strategic insights on restaurant branding, and make your mark in the competitive industry.
Implementing a gift card program demonstrates that your restaurant is committed to providing a high-quality dining experience and values customer satisfaction. It shows that you are willing to invest in modern solutions to meet the evolving needs and preferences of your target audience. Considering introducing a gift card program? Find out how partnering with a restaurant marketing agency can maximize its success and elevate your customer satisfaction levels.
Foster Customer Loyalty and Repeat Business
Gift cards are an effective way to encourage repeat business and build customer loyalty. When someone receives a gift card to your restaurant, they are more likely to visit and try your offerings. If they have a positive experience, they are more likely to return in the future and become loyal customers. Considering innovative restaurant promotion strategies? Delve into the realm of effective marketing ideas for restaurants to elevate your brand and keep those gift card users coming back.
By providing an enjoyable dining experience and exceptional service, you can transform gift card recipients into regular patrons. This creates a cycle of repeat business, as satisfied customers are more likely to purchase gift cards for friends and family, exposing your restaurant to new potential customers.
Moreover, loyal customers tend to spend more per visit and are more likely to recommend your restaurant to others. Word-of-mouth marketing is a powerful tool for small businesses, as it builds trust and credibility within the community.
Restaurant's Gift Cards
Guests will spend on average $59 more than the worth of their gift card
Boost Sales During Slow Periods
One of the most significant benefits of gift card programs is their ability to generate some extra revenue during slow periods. Gift card sales provide an influx of cash when business is typically slower, such as during the off-season or on weekdays.
When customers redeem their gift cards, it helps drive traffic and sales during these slower times. This can help balance out cash flow throughout the year, providing a more stable and predictable revenue stream.
Furthermore, customers often spend more than the value of their gift card when they visit your restaurant. This “overspend” can lead to increased sales and higher average check sizes, ultimately boosting your bottom line.
Increase Brand Awareness and Reach
Gift cards serve as mini-advertisements for your restaurant, helping to increase brand awareness and reach. Whenever someone gives or receives a gift card to your restaurant, it puts your brand in front of new potential customers.
The Gift cards themselves act as physical reminders of your restaurant, keeping your brand top-of-mind for recipients. When they are ready to redeem their card, your restaurant will be their first choice.
Embracing the Power of Restaurant Gift Cards
Gift card programs offer a multitude of benefits for restaurant owners, from boosting sales and customer loyalty to simplifying marketing efforts and enhancing cash flow. By implementing a well-designed gift card program, you can attract new customers, encourage repeat business, and drive higher overall sales.
Imagine the smile on a customer’s face when they receive a thoughtful gift card to your restaurant or the excitement of a new patron eager to try your cuisine for the first time. These moments are made possible by the power and convenience of gift cards online, connecting people through the joy of dining out.
As you embark on your gift card program journey, remember to choose the right software, train your staff, and effectively promote your program. By setting clear terms and conditions, leveraging data for targeted marketing, and continuously monitoring and optimizing your efforts, you’ll maximize the ROI of your gift card program.
