If it is in fact true that it is better to give than receive, then gift cards must be at the top
of a restaurateur’s wish list.
These simple plastic cards could be an important marketing tool – and revenue generator – at this busiest of commercial periods on the calendar.
Dave Ball, Divisional Sales Manager (Kitchener) at Flanagan Foodservice, sees gift cards
as a holly, jolly way to make the season bright for several reasons.
First and foremost, he points out; research indicates that people will spend more on a gift
card than they will on a gift. While they might buy a $50 present, they will likely raise
the stakes and buy a $75 or even a $100 gift card at a restaurant, the card itself being
relatively unsubstantial to hold. “They don’t want to seem cheap,” says Ball, “when it
comes to choosing an amount to give.”
The established and classic printed gift certificates, though they can do the job, just don’t
have the aesthetic appeal and cannot outperform debit card-style gift cards, he adds.
“The more professional it looks the more money they are going to spend with you.”
The vagaries of human nature also come into play in a positive manner – and that can
play right into a restaurant operator’s hands in terms of immediate cash flow. It turns out that many restaurateurs and the folks behind the scenes who run the business end of
things realize that 17 percent of gift cards are never redeemed.
“That’s massive,” Ball says. “We know these numbers from a top-rated Canadian
restaurant franchise. But even if a small restaurant did $2,000 in gift cards, you are
looking at nearly $350 for doing nothing.”
Add yet another gift beneath the tree: if the cards are purchased as festive and holiday
presents in the hustle-bustle of a busy December, the delay when people redeem them
could prove to be a boon to the restaurateur who might see a bump in sales later in
January and February when business is typically slower.
And when they do get around to redeeming them, patrons often find themselves using
the full amount of their gift card – and then some. Customers generally buy additional
food and more expensive dishes than they might otherwise; compound that with the
potential for increased sales of beverage alcohol, and the result can be some healthy
extra revenue in winter’s gloomier months.
“Most restaurants see a rapid January decline in sales,” Ball notes. “However, gift cards can bring people into the restaurant in slower times. You are still winning as people go over their gift card value and spend more, perhaps for the purchase a $60 bottle of wine they wouldn’t ordinarily select. They up-sell themselves.”
Even with the excitement of the holiday season taken out of the equation, the gift card
offers an additional benefit. If using the card represents the first time the guest has
been to your establishment, it is a perfect opportunity for you to show off what you can
do – and in doing so, win a new customer who says, “Wow! That was great; I’m going
to come back.”
Gift card sales can beget gift card sales, according to Ball, and they can also be used in
customer-appreciation situations, too. It is this flexibility and versatility which sometimes goes unremarked. As well, they can be used in a wide range of operations, from fine dining to coffee-shop fare.
Though it is an ancillary benefit (and one that certainly is not high on the wish list), gift
cards can be used by managers to smooth ruffled dining feathers when a guest has not
had a fully satisfactory dining experience.
It’s yet another advantage: at virtually any level of dining or restaurant business, the gift
card has value. Ball maintains firmly that there is not a restaurant or hospitality business
out there that can say that a gift card would not work for them.
He points out that in probably 75 percent of cases, touch-screen POS systems make the
gift card option simple and convenient with perhaps only a software upgrade. That also
permits better tracking than paper certificates.
“A gift card is a win-win scenario,” Ball states. “Dollars in the restaurant business can be
extremely tight, and gift cards mean that you are getting paid first. There are not many
other scenarios in hospitality where that happens.”
Article by Andrew Coppolino