Selling gift cards in your restaurant is a smart move for several reasons. They help you generate immediate cash, bring more guests into your restaurant, and boost your revenue since diners often spend more than the value of the gift card when they redeem it. But, while selling gift cards may be a no-brainer, you still need to choose whether to offer physical gift cards, digital gift cards, or both.
In this guide to restaurant gift cards, we’ll cover:
A restaurant gift card is a physical or digital card that a customer purchases from you with a certain amount of money pre-loaded onto it (for example, $50 or $100). The traditional intent behind this product is that a customer will give it to someone else to use at your restaurant.
Offering gift cards is a key part of knowing how to increase restaurant sales because gift cards can help you acquire new customers and encourage repeat business from existing customers.
According to Fiserv’s Q1 2022 Gift Card Gauge survey, 80% of American consumers planned to purchase gift cards in 2022, and 46% consider gift cards their “go-to alternative to tangible gifts.”
The benefits and popularity of gift cards are clear. Next, we’ll dive into the differences between physical vs. digital gift cards.
A physical gift card looks and feels like a debit or credit card, and in order to use it, guests need to present the card when it’s time to pay for their meal.
While these types of gift cards appeal to many diners and are still quite common, physical cards have fallen out of favor with some consumers in the digital age. Let’s break down the pros and cons of physical cards.
Distributing physical gift cards that are branded with your logo and colors helps build awareness of your restaurant, and keeps your venue top of mind every time the recipient opens their wallet and sees the card.
With modern-day gift card solutions like TouchBistro Gift Cards, you can easily create and sell physical cards for single locations or multiple venues. You can even choose from templates or include your own customized designs.
According to 2021 data from Fiserv, 54% of consumers still prefer physical gift cards. These findings are in line with a 2019 study that reported both purchasers and receivers prefer physical vs. digital gift cards.
The survey ultimately found that more than 60% of people who prefer physical gift cards cite the fact that they’re a “tangible gift,” while 46% say they opt for the cards so the recipient “has something to unwrap.”
As a restaurateur, physical cards can be easier to sell than digital restaurant gift cards because they’re often on display at your venue, for example at the host stand or the bar. This means your guests will be more likely to see – and think about buying – a card.
Physical gift cards are also easy to give, for instance as a stocking stuffer or inside the envelope with a holiday or birthday card. They’re also easy to use, which is especially beneficial for people who aren’t as comfortable with technology.
Seinfeld fans will recall George Costanza’s bulky wallet – and while it’s good for a laugh, it can be a poor place to keep a gift card. Unless the recipient of a gift card is a fairly organized person, there’s always a risk that the card will get lost or forgotten.
To purchase a physical gift card, customers have to visit your restaurant in person, which isn’t always convenient. This can be unappealing for people who prefer instant gratification and the ability to immediately deliver a gift card to their chosen recipient, or those who simply don’t have time to visit your venue.
Most physical gift cards can be re-loaded with money by the recipient. However, if the customer decides to stop using the card rather than reloading it, this will generate some plastic waste.
Physical gift cards can be branded, but not personalized (beyond writing the recipient’s name on the card in permanent marker).
Digital restaurant gift cards are electronic cards that customers can purchase online and email to their chosen recipient, who can then use their smartphone to redeem the card.
Online restaurant gift cards are increasing in popularity for multiple reasons, which we’ll dig into shortly. And, a 2022 study by Patryonix reported that consumers actually spend more on digital cards than they do on physical ones. However, digital cards do have some downsides. Let’s walk through the advantages and disadvantages.
Since the COVID-19 pandemic, many people are looking for contactless solutions. This makes an online gift card the perfect option for both the purchaser and the recipient, since there is nothing associated with the gift that either party has to physically touch.
Even more good news? The pandemic has sped up the transition toward new payment technology, which means more people than ever are now familiar with contactless payment methods.
Fans of instant gratification will love digital gift cards because they’re easy to purchase and send, with immediate delivery to the recipient at the click of a button. Not to mention, your guests can pre-schedule gift cards to be delivered at a certain time and date, allowing them to plan in advance.
They’re also easy for diners to redeem at your restaurant or when they order online. For example, with TouchBistro Digital Gift Cards, guests can redeem their card from TouchBistro’s Customer Web App in venue or via TouchBistro Online Ordering when they’re at home.
Today’s consumers love personalization. In fact, 90% of American consumers consider personalization appealing, according to 2022 research from Statista.
Fortunately, many digital gift card solutions allow your customers to personalize their gift for the occasion or holiday, giving you an opportunity to amp up your restaurant holiday gift card promotions. This means you can help your customers spread personalized cheer on birthdays, Mother’s Day, and more!
Online gift cards are a less expensive option for restaurants than physical cards since no plastic card has to be produced in order to use them.
For the same reason, there’s also no plastic waste associated with digital cards, making them an eco-friendly option for your restaurant.
Even though a physical gift card is small enough to fit inside an envelope, it’s still a tangible item that your customers can physically give to another person. In contrast, some consumers feel that online restaurant gift cards are a bit impersonal.
As the saying goes, “out of sight, out of mind.” Digital gift cards can be more difficult to sell at your restaurant since customers won’t see the card front and center, the way they would see a stack of physical gift cards on your host stand. (Tip: One way to get around this is to add a sign advertising your gift cards at the point of purchase, or to market your digital cards in your restaurant newsletter and other customer communications).
Now that you’ve got the lowdown on both physical and digital restaurant gift cards, it’s time to find the right solution for your business.
With TouchBistro Gift Cards, you can drive immediate cash flow and repeat business with customizable physical and digital gift cards for your restaurant. That’s right – you don’t have to choose just one option!
Not only do TouchBistro Gift Cards offer all the gift card benefits we walked through earlier, they also integrate with the TouchBistro POS, unlocking powerful reporting capabilities.
Leveraging gift cards at your restaurant is an excellent way to increase sales and deliver a great guest experience. And, if you can offer both physical and digital gift cards, you and your customers will get to enjoy the best of both worlds. Happy selling!
by Katherine Pendrill
Katherine is the Content Marketing Manager at TouchBistro, where she writes about trending topics in food and restaurants. The opposite of a picky eater, she’ll try (almost) anything at least once. Whether it’s chowing down on camel burgers in Morocco or snacking on octopus dumplings in Japan, she’s always up for new food experiences.
Almost all retailers offer consumers gift cards as a way to shop or give money to friends and family. There are two types of gift cards—physical and digital (e-gift cards)—and each comes with a wide range of features and benefits. If you’re interested in purchasing gift cards for others during the year-end holiday season or for birthdays or other occasions, or you want to buy them for yourself, it helps to understand how they compare with other payment methods.
How Gift Cards Work
A gift card—also known as a stored value card—is a form of payment that can be used to make purchases at retail stores, gas stations, restaurants, and other locations. You load money onto the card, which you or the gift card’s recipient can then spend at accepted locations.
Gift cards can be open-loop or closed-loop. An open-loop gift card can be used anywhere that brand of card is accepted. For example, if you have a gift card that’s branded with the Visa logo, you could use it to make purchases anywhere Visa is accepted.
A closed-loop card, on the other hand, can only be used at specific merchants. For instance, if you purchase a gift card from Starbucks or Amazon, you or the gift card’s recipient would be able to use it to make purchases only at the retailer issuing the card. Hybrid cards are an in-between option: They allow you to use a gift card at a number of merchants associated with the card but are not accepted everywhere.
Some prepaid gift cards charge a fee to purchase them. You may also pay a separate fee to reload money to a gift card if you wish to reuse it.
Physical vs. Digital Gift Cards
Gift cards can be physical—meaning a plastic card—or digital. Digital gift cards have no physical form; instead, you’re assigned a unique gift code number that you can use to redeem at online retailers when making purchases. Physical cards remain the most popular kind of gift cards, in part because gift-card givers perceive them as being more in line with social norms than digital cards, according to recent research in Psychology & Marketing.
Companies such as Amazon, Walmart, and Target allow consumers to purchase physical cards as well as to load online or digital accounts. Major restaurant chains, such as Starbucks, Chipotle, and Chili’s, also offer customers digital and physical gift cards. These cards make it convenient for customers to pay for their drinks and meals using an app or in-establishment card reader to speed up the checkout process.
You can also store codes for digital gift cards inside a mobile wallet app, such as Google Pay, Apple Pay, or PayPal’s Venmo. Then, when you’re ready to check out, you can select your digital gift card as your preferred method of payment.
Federal law prevents gift cards from expiring for up to five years after their activation date, but failing to use a gift card could trigger an inactivity fee.
Pros of Gift Cards
Gift cards can offer a number of advantages. For example:
In terms of gift giving, gift cards might be preferable if you have no idea what to buy for someone on your gift list, as they allow the recipient to buy what they want, when they want it. Just keep in mind that choosing closed-loop gift cards over open-loop cards can limit the giftee’s options for where they can use the cards.
If you’re interested in using gift cards to help kids learn the basics of spending, you may want to research prepaid debit cards for teens. They work similarly but are typically open-loop.
Cons of Gift Cards
Gift cards can also have some downsides. Here are five.
While prepaid gift cards can be stolen or lost, just like a debit card or credit card, the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act offers protections for gift cards issued by retailers and banks.
Prepaid Credit Cards vs. Gift Cards
When weighing the pros and cons of gift cards, it’s important to understand the distinction between them and prepaid debit or credit cards. Both can be used to make purchases either in stores or online, but while you might purchase gift cards to give away, a prepaid credit card is something you might use yourself for everyday spending if you don’t have a bank account or would rather not pay with cash or a regular credit card.
There are several cards offered by prepaid credit card companies that offer consumers the ability to buy cards and reload them at retail locations. For example, the PayPal Prepaid MasterCard allows users to easily transfer money between their PayPal account and a physical card that can be used anywhere that MasterCard is accepted. Note, however, that there may be numerous fees involved in using these prepaid cards.
Consider a secured credit card if you have no credit or poor credit. These cards typically require a small cash deposit, but they can be a stepping-stone for building a credit history.
Prepaid credit cards, debit cards, and reloadable gift cards generally offer better value than retailer-specific gift cards, but regular credit cards can offer some advantages when it comes to earning rewards on purchases or taking advantage of card-specific features, such as travel incentives or rewards bonuses.
Something else to keep in mind when weighing whether to use prepaid credit cards or gift cards for purchases is how they affect your credit score. These types of accounts are not loans, as you’re not borrowing money, so they won’t show up on your credit reports. This means that they don’t help to build your credit history. If you’re looking for a way to establish or improve your credit, a regular credit card can help you do that. Paying on time each month, keeping your balances low, keeping older credit card accounts open, and limiting how often you apply for new credit can help you grow your credit score over time.
A gift card can be a good present for both the recipient and the giver. Sometimes it's hard to choose a gift for someone, and an open-loop card, from Visa or MasterCard, for example, lets the recipient buy what they want. Gift cards can be very convenient to purchase and use. And they can be useful for occasions, such as a wedding, to help the recipient cover costs from a particular retailer.
A gift card may be declined for a variety of reasons. A Visa gift card, for example, may be turned down because the purchase price is greater than the funds available on the card or because it has to be activated before it's used. Or sometimes there may be a waiting period to help thwart gift-card fraud; check the gift card packaging or your receipt to learn when the card will become usable.
A consumer protection afforded by the Credit Card Accountability Responsibility and Disclosure (Credit CARD) Act is that a gift card cannot expire until at least five years after its activation date. In addition, a card issuer can't charge an inactivity fee unless there's been no activity on the card for one year and the card spells out clearly the policy regarding that fee.
Yes. Generally, you should be able to purchase any gift card with a credit card. If you have a rewards credit card, one benefit might be that your purchase will earn you rewards, though not all credit cards count gift cards towards rewards. Also before using your credit card for this purpose, check the card's terms and conditions to make sure that the card issuer doesn't treat a gift card purchase as a cash advance.
You may be able to get a replacement card, which will be an easier task if you have the gift card number. If you have the purchase receipt or the receipt from when the card was activated, check to see if it contains the card number. Or, if you ordered the card from a website, you should be able to access the details of the transaction online. Next, contact the gift card seller, explain what happened and ask if they will issue you a replacement gift card.
To prevent a recurrence, take these steps:
The Bottom Line
A gift card is a type of payment that a person can use to make purchases at retail stores, gas stations, and restaurants, among other locations. Money is loaded onto a card which you or the gift card’s recipient can spend at accepted outlets. Physical cards are still the most popular, though recipients enjoy the convenience of digital cards. While there are more gift cards now than ever—including multi-store cards, single store cards, and bank-issued cards—the best gift card is probably the one that a recipient will be happy to receive and will use.
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