It’s never a bad time to start a gift card program. And with the holidays soon approaching, restaurants would be wise to set one up before the year’s end. Nearly half of restaurants’ annual gift card sales take place in November and December.
“Gift cards are a great way to boost revenue, and especially with the holidays, more and more people are purchasing things digitally, so you want to be in that game,” says Amina Gilani, cofounder of Sociavore, a restaurant website builder, and co-owner of Toronto-based restaurant YIAYIA. “It’s also just a really great way to extend your brand and create brand awareness.”
As Gilani points out, there are numerous benefits to having a gift card program, with increased revenue opportunities at the forefront. A 2021 study by restaurant e-commerce platform BentoBox, for example, showed out of 7,000 customers, 68% of guests spent more than the initial value of their gift cards, while 18% of gift cards were never redeemed.
“In some cases, gift cards are basically free money, but more importantly, they’re a great way to reach new customers,” says Lauren Byrd, BentoBox’s director of customer success.
Where to start
Setting up and managing a gift card program has never been easier thanks to the numerous technology solutions at your disposal.
A good starting point is to look at your POS system and see if it offers an integrated gift card feature. Square, SpotOn, TouchBistro, and Toast, for example, all have programs through which you can set up e-gift cards and also order physical cards. Going this route allows you to sell, track, and redeem gift cards, all from the same hardware you’re already using.
While this is generally the simplest solution, it’s far from the only solution. If your POS system doesn’t have an integration, your next best bet is to look at the other technology options on the market.
“Going digital gives you a lot more visibility,” says Gilani.
Gift card technology platforms automate valuable data, like number of gift cards sold, total gift card sales, and guest balances available, creating a more efficient and transparent program for you to build on. Platforms include those like SwipeIt and VoucherCard, which set you up with a digital storefront that you can link customers to through your website.
If you’re in the market for a new website, platforms like BentoBox and Sociavore create websites strategically designed for restaurants, equipped with built-in gift card program capabilities. Typically, the process then becomes as simple as going to your website’s back-end, turning on the gift card program, and choosing from a selection of templated designs. A “gift card” page will automatically show up on your website’s navigation bar.
Of course, there’s also the old-fashioned method of designing cards with a commercial printer and relying on a physical book to keep track of sales. But this is where gift card programs become difficult to manage, especially as your brand grows, and it’s generally viewed as a last resort.
Gift Card Program Best Practices
Once you set up a gift card program, you want those cards to sell. Here are a few best practices to drive success.
Offer digital and physical options.
The goal is to make buying and gifting as convenient as possible. For some customers, that may mean buying a physical card on their way out the door. But for others, purchasing online is a lot more attractive.
“With digital, you can gift a restaurant from anywhere in the world, and not have to go to that place to buy the gift card, so it opens up the ability to share the restaurant,” says Gilani.
Most digital options automatically send out gift cards to recipients by email upon purchase. Some even let customers schedule a date for when the card gets sent out. Giving options, both physical and digital, enables you to widen your customer base.
Spread the message with marketing designed for multiple mediums, and multiple demographics.
What good is a gift card program if no one knows about it? Market your program wherever you already connect with customers, whether that’s at the table with table tents or through email blasts to your digital subscribers.
“You want to ensure you’re trying out different platforms and catering to different demographics,” says Byrd. “If I have customers who aren’t super tech savvy, I have a holiday gift card display at the host stand. If I’m trying to target a younger demographic, I do fun promotional videos on TikTok.”
Other options include printing a QR code on the menu, table tent, or receipt that links to your online gift card program. You can also drop a marketing flier in to-go bags, include a blurb about your program at the end of each receipt, or put a marketing sticker on your window. Find what fits your brand, and aim to use at least three different marketing mediums.
Draw in customers with incentives.
Among the most effective gift card strategies is to reward customers for buying gift cards. For example, award a free, $10 gift card for every $75 spent on gift card purchases. This entices customers to look to you for gifts, while showing that you value their business.
“In the restaurant industry, the make or break is repeat business and driving loyalty,” says Byrd. “Providing customers with a gift card ensures they’re going to come back a second time.”
Include a variety of denominations customers can choose from.
While gift cards are designed to boost sales, don’t underestimate smaller valued cards, like those in the $10 to $40 range. Gift card recipients tend to spend more than the gift card amount they’re gifted, and by offering cards at multiple price points, you invite those with varying budgets to help potentially get new customers through your door.
Higher amounts, like those in the $100 to $300 range, are also a nice option for customers seeking gifts for a family.
“You might want to do the customer bonus on the higher gift card amounts,” says Gilani, pointing to the strategy of giving customers, say, a $20 gift card for every $100-plus gift card purchase.
Train staff on your gift card program.
“When introducing a gift card program, a key aspect for business owners is education,” says Saumil Mehta, head of Square’s Point of Sale and e-commerce, pointing out that staff training is an essential part of the process.
Set up a time in advance to teach staff how to handle both gift card purchases and redemption to ensure the process doesn’t slow down operations. This is crucial for creating a seamless and convenient guest experience that entices customers to return.
Be mindful of gift card revenue in your accounting.
Gift cards are a great way to boost cash flow. But ideally, you’re not blowing all that cash at once. We know not all gift cards end up getting redeemed, which gives you a cushion. Yet, you still have to provide service to those who do redeem gift cards down the road.
“We have some operators who give away bonus gift cards [to customers who buy holiday gift cards], and they make it so the bonus amount can only be redeemed, or it even increases, in the new year,” says Gilani. “It’s just one way to encourage people to keep the gift card for later and use it during the slower months.”
Consider running a social media contest campaign.
Make your marketing more engaging by launching a social media contest where the prize is a gift card. This announces the fact that you offer gift cards, while creating the potential to draw new visitors to your brand.
“Last year we had a costume Halloween contest,” says Byrd, who’s also the co-owner of Georgia-based Two Birds Taphouse. “If you tagged Two Birds, both the location and Instagram handle, you were entered to receive a gift card, and then people’s friends were seeing those tags with all of the fun photos.”
Use gift cards to turn around bad experiences.
Another instance where it can pay off to give away a gift card is when a customer has a bad experience. Whether someone complains directly to the restaurant or leaves a bad review, gift cards give you the opportunity to redeem yourself.
“You can just say, ‘Hey, let us try to wow you better next time’, and hand off what’s a tangible gift,” says Byrd.
Incorporate gift cards into your loyalty program.
Gift cards are also a great way to say thank you to your guests. And many restaurants are starting to incorporate them into loyalty programs.
“With gift cards, extra promotion drives incremental revenue,” says Mehta, noting the payoff when used on loyal customers.
Grace Dickinson is a reporter at Back of House. Send tips or inquiries to firstname.lastname@example.org.
[Photo courtesy Andrea Piacquadio]