Restaurant Lessons from Retail – Gift Card Incentives

With the season of giving upon us, restaurant operators continue to aggressively promote their gift cards. Even with the increasingly difficult methods of accounting for gift card sales, restaurants are wise to provide incentives to their customers in order to build future traffic and amass pre-paid revenues.

But what will make customers want to “act now”? Is it the convenience of not needing to think about what to buy for others, investigate ideas and spend time shopping for gifts? Wanting to share our favorite place to dine with others? Or more likely, is it our own desire to give ourselves a gift in the form of that little added bonus of 25 extra dollars with every $100 in gift purchases? In any event, gift cards can be a good alternative to giving unwanted gifts that need to be returned after the holidays.

Most bonus gift-card promotions provide a longer-term payoff and have restrictions such as not being valid until after the holidays or only good for redemption Sunday through Thursday. But why not incent an immediate benefit? Some would argue a bird in the hand is worth two in the bush. Take note of Old Navy’s current gift card promotion in which customers who purchase $40 or more in gift cards receive an immediate 15% discount on their current retail purchase. On a $100 purchase, you receive $15 off instant savings against a $40 purchase.

Restaurant operators who provide an immediate benefit to customers will likely see increased impulse-driven sales with less revenue to defer to the next year and ultimately provide greater value to their customers.

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