Gift cards are a front-of-mind gift-giving option for a vast number of U.S. consumers. The gift card market is worth more than $160 billion and it has been growing by double-digit margins since 2015 – and gift card purchases have been a means of paying restaurants forward during the pandemic. But according to a new study from Incisiv, restaurants are still leaning on old-school tactics when it comes to managing their gift card sales instead of harnessing the data-driven power they can offer. By better connecting gift cards to loyalty programs, restaurants can capitalize on the special occasions that inspire guests to use these cards – occasions that happen to be predisposed to generating feelings of loyalty. The study advises restaurants fine-tune their approach to gift cards in four areas: First, make gift cards a more frictionless experience for guest and employee alike. That means considering such actions as how to minimize the steps/people involved in processing a transaction, or if you can add a gift card balance to a third-party wallet or loyalty account, for example. Second, make it possible to purchase, transfer, redeem and reload gift cards across all of your purchasing channels. Third, make it more personal – like so much of the experience of dining out, customization of restaurant gift cards helps drive loyalty. Do you offer a range of designs for a range of occasions? Sample messages? Can a giver include a special video message or photo? Finally, make recommendations. Suggesting products based on the occasion and the recipient can help you upsell your cards, as well as generate data that can improve your ability to segment and target your customer base going forward.
Does your loyalty program look different now than it did in February? It should. The kinds of promotions that were central to your loyalty program back then – along with your method of operating your program – might come across as inappropriate now. It’s especially critical that you’re using your loyalty program to fuel the parts of your business that need support in the current environment and to collect information about how, when and what your customers are ordering. This will help you to keep business coming in now and provide a more secure bridge to operating post-pandemic. So what do you want people to know about your restaurant? In what areas of your business do you want to build awareness and generate more sales? Your loyalty program is a great vehicle for directing customer focus. Incentivize people to place their order via your website or app and pick it up curbside. Integrate contactless payment with your loyalty program so you’re automatically generating data (and at a time when safety is the new hospitality, also ensuring your guests don’t have to swipe a physical card to earn points). Increase the appeal of your program by creating joint offerings with partner businesses and offering more flexible terms. Stay in contact through email and social media – posting daily on social media is important for awareness right now – and make sure to promote your safety practices.
Throughout the pandemic, restaurant gift cards have taken on extra significance – in good ways and bad. Early on, gift card purchases were perceived as a means for the public to keep their favorite restaurants afloat when the businesses couldn’t open their dining rooms or, in some cases, operate at all. Regional and industry efforts to sell gift cards endeavored to support the restaurant industry too. Yet when dining rooms began to reopen, some reports advised consumers against redeeming their gift cards – at least at the beginning while operators were still getting their footing. Even now, while restaurants may be serving a steadier stream of customers, the times don’t exactly feel normal. A recent report from Eater entitled “Am I a Jerk if I Cash in My Restaurant Gift Cards?” fielded a question from a reader who was feeling guilty about redeeming stored cards. So where do you stand on them? First, it may help to understand gift cards’ potential: A recent study from First Data found that 74 percent of consumers said when they redeem a gift card, they typically spend about $54 over the face value of the card – and 34 percent said having gift cards encouraged them to visit businesses they normally wouldn’t. With that in mind and with the potential for gift card purchases to increase over the coming holidays, it may help to adapt your strategy – both in how you market the cards and account for them. Assess how gift cards have worked for you in the past. Is there opportunity for you to partner with complementary businesses on shared gift cards? If you genuinely want your guests to use their gift cards now, tell them (in person, on social media, in your email newsletter and on your website) that you welcome them – and perhaps take the opportunity to ask them to remember to compensate their server well with their gratuity. Depending on how well funded your business is at the moment, you may also want to adjust to how you treat gift card sales. The Eater report mentions that Wayfare Tavern considers gift card purchases as deposits on future sales – and they don’t process the actual sale until the card is redeemed.
While the news headlines may be gloomy, don’t lose hope – there actually are foodservice operators who are managing to make lemonade from a whole lot of lemons right now. The ones forging a way through these stressful times are getting creative: Wingstop, which is experiencing an uptick in sales right now, is tapping into an oversupply of chicken and offering a free delivery promotion that is driving sales. Farmers Restaurant Group has shifted to a bodega concept that sells meal kits customers can schedule for pickup using OpenTable. Another operation that has nimbly shifted its approach is Front Burner Restaurants, which operates eight restaurant brands in six cities in the southern U.S. At the start of the pandemic, Front Burner had to furlough 4,000 employees, but it quickly shifted gears to create Furlough Kitchen, a non-profit concept that offers one free meal kit a day from its restaurants to hospitality workers who have been furloughed as a result of COVID-19. Through the support of community donations and anticipated federal stimulus funding, the company rehired employees working in its catering operation, as well as some of its hourly employees who take orders, post on social media and carry food out to customers for curbside pickup. Regular customers, suppliers, vendors and others in the community have been generous with donations and other support, and tips are collected into a pool that is distributed on the pay cards of furloughed employees. Furlough Kitchens currently has two locations and expects to open five additional locations from its existing restaurants soon. In a recent Restaurant Business podcast, Front Burner CEO Randy Dewitt said they are currently funded through the next 60 to 90 days. He thinks that finding a way to keep his restaurants open – even if they’re not profiting right now – should help with their eventual recovery. The community goodwill he is building in the meantime won’t hurt.
During times that feel difficult and unprecedented, it helps to look for silver linings. Right now for many people, one of those silver linings is feeling an increased sense of pride in our communities and a closer connection to them – even as we have to keep our physical distance. Neighborhoods are coming together to provide help for the vulnerable, and that includes people isolated at home and businesses working hard to survive. While the restaurant industry has long been adopting a local approach to suppliers, times like this prove the value of simply being a good neighbor as well. A recent NBC news story from San Diego reported that a couple launched a GoFundMe account to help two groups important to them: healthcare workers on the frontlines of coronavirus treatment and local restaurants that are part of the fabric of the city. The account collects donations from the public and the funds can be used by healthcare workers at San Diego hospitals to buy takeout or delivery food from the city’s restaurants. The account, which launched on March 16th, was just $1000 shy of its $15,000 goal at the time of this writing. Consider tapping into the ingenuity of friends and supporters of your restaurant in your community. Many are looking for ways to be useful during these times and want to help you work through them. Make it easy for them to support you by purchasing gift cards on your website – or by sharing the website https://supportrestaurants.org/, a global initiative that allows people to buy gift certificates for their favorite restaurants below face value but redeem them at face value.