With the rise of branded currency and e-commerce, the gift card industry is booming—and full-service restaurants are positioned to reap the benefits.
In the growing full-service restaurant segment, traditional and digital gift cards are a powerful marketing and sales tool. The global gift card market is projected to hit nearly $700 billion dollars by 2024, and restaurant owners need to have a strong program in place to make sure they are taking full advantage of this lucrative business opportunity while it is on the rise.
The foodservice industry has been the most lucrative for gift card sales historically, with over 30 percent of all general gift cards being redeemed at restaurant locations. Now, with the popularity of e-commerce and digital gift cards, the time is better than ever to grab a slice of the gift card pie.
Why the Gift Card Model Works for Full-Service Restaurants
The math is simple: When consumers have gift cards in their possession, they spend more money. For example, if a customer receives a $200 Buffalo Wings & Rings gift card, they are more likely to order an expensive menu item or treat their friends to a meal. In fact, according to Givex research, over 70 percent of gift card recipients spend more than the face value of their cards. Consumers view the funds as a coupon rather than a budget, which means diners feel less guilty splurging when using a gift card rather than a credit card or cash.
Beyond this, the gift card industry drives restaurant foot traffic and cultivates brand awareness. Over 40 percent of consumers try a business for the first time after receiving a gift card. The nature of gift card sales inherently results in multiple visits—the buyer and the redeemer—which means two sit-down meals for full-service restaurants.
Multi-brand restaurant operators have the advantage of using a mutual gift card that is redeemable across various stores. For example, the Darden Restaurant gift card provides access to Olive Garden, LongHorn Steakhouse, Cheddar's Scratch Kitchen and more. This method creates an easy cross-promotional campaign while also incentivizing the consumer to try new dining options.
Since the gift card industry has long been underutilized, there are many mistakes that restaurant owners make when it comes to entering the market. Firstly, many companies do not notice when gift card inventory gets low and actually run out of stock during the lead-up to the holidays, resulting in lost gift card sales and disappointed customers. Like everything else they stock, restaurants need to ensure they track gift card inventory and re-order in time for peak periods like the holiday season. In addition, brands need to find ways to optimize the visibility of their offerings. A great way to guarantee this is to train the restaurant staff on why gift cards are important, how to sell them and how to activate them for customers.
How to Adapt to the Changing Gift Card Market
Now that gift cards are no longer a paper certificate but are instead a mobile technology, restaurant owners need to take notice. Digital gift cards present an easy and convenient option that has resulted in an annual growth rate of 200 percent. Considering the average American has eight gift cards sitting at home, the ability to pay by mobile, purchase with an app and keep track of the funds online is creating a more streamlined experience for the consumer, restaurant owner and the industry at large.
In the age of online marketplaces, it is also important to remember that eGift cards do not carry shipping costs and offer a convenient gift option for consumers who don't necessarily have time to visit the restaurant.
In other words, digital gift cards are great for last-minute shoppers who don't know what to buy.
Restaurant owners need to promote and market their gift card programs to ensure that the offering is getting in front of the right eyes. This can be done by incentivizing a gift card sale with another gift card, creating specialized discounts for card users or promoting visibility on websites or through in-store displays. Some brands even incentivize gift card sales with a promotional coupon or a redeemable reward.
How to Use Branded Currency
In the past few years, gift card technology has turned from an ancillary sales item into a primary payment method, especially as restaurants prioritize mobile ordering, third-party delivery and consumer-facing loyalty programs. Often, digital gift cards become the principal means of payment for these apps because of automatic reloads and top-ups—what those in the restaurant space call “branded currency.”
As we look ahead, branded currency is the lens by which most brands should view the gift card market as a whole. eGift cards create mobile wallet solutions that work exclusively for each specific brand and promote repeat business. For example, some hotels, resorts, cruises and even music festivals issue RFID wristbands to guests, which can be loaded with funds. This use of branded currency speeds up on-site transactions for guests and creates a better customer experience overall.
With today’s rise of branded currency and e-commerce, gift cards are becoming a more effective sales tool across all restaurant types and so developing a multi-channel program that includes both traditional and eGift cards will result in a boost to overall restaurant sales and position businesses for unprecedented success.
Graham Campbell is the COO of Givex, a global cloud-based operations management solution designed to streamline business efficiencies and generate valuable and actionable customer data with offices in Canada, the United States, the United Kingdom, Australia, China, Brazil, Singapore and newly opened in Mexico City. Campbell is an innovative technology executive with over 13 years of experience in the payment, e-commerce and point of sale sectors. He started at Givex in March 2006 and since then has held positions including: VP of Projects & Implementations, VP and General Manager of Givex’s point-of-sale (POS), Senior VP of Product Development and now holds the position of the company’s Chief Operating Officer.