Without a doubt, product expansion has the potential to bring big profits to small businesses. Restaurants should always be brainstorming what other products they can effectively sell besides — or separate from — regular items on their menus. Such expansions could include a packaged version of an original ingredient, like jam or barbecue sauce, or even branded merchandise like t-shirts, shot glasses, or mugs. But what many operators don’t realize is how well restaurant gift cards can work for their business.
What are the perks to investing in restaurant gift cards? And what things should you keep in mind as you start selling them?
When you’re training your servers or cashiers on how to best upsell, you should be including your restaurant gift cards in that process. For cashiers, it can be seamlessly done at point of sale as everything else a customer has ordered gets rung up. For table servers, the best opportunity would be before presenting the check to the table (that way, your server has a chance to add it to the check before printing it out).
Unlike most retail products sold in your establishment, restaurant gift cards won’t ever go bad. They don’t spoil. If your early batch of restaurant gift cards don’t sell out immediately, there’s no worry of having to throw out the product in a few weeks.
With that in mind, consider choosing a non-seasonal card design that can appeal to customers no matter what time a year it is. Speaking of…
A Year-round Purchase
Restaurant gift cards are not necessarily a seasonal item, so make good use of various gift giving opportunities throughout the whole year. Yes, most people think of Christmas when it comes to restaurant gift cards, but don’t discount birthdays, graduations, Father’s and Mother’s Day, and any other gift-giving occasion! Restaurant gift cards allow for the giftee to make their own choices, but it still feels more personal than their friends or family simply giving them cash.
Definitely mention on your restaurant’s website that you offer gift cards, but consider mentioning it on your menus or at your cash register as well. Mind you, the type of restaurant you are and the atmosphere you project should influence where you post about your restaurant gift cards. If your establishment is fine dining, you are not going to have your customers come up to a cash register to pay, but you can still (tastefully) include a call to action at the bottom of your menu to suggest diners purchase restaurant gift cards for their friends.
One of the biggest advantages of selling restaurant gift cards is that you generate revenue immediately. The gift card purchaser buys the card upfront, so if the gift card gets lost somewhere (or the giftee just decides never to redeem it), your restaurant still got paid upfront. The flipside to this, of course, is that if or when the gift card is used, the revenue has already been accounted for.
Securing Future Dining Experiences
When a guest purchases a gift card, it sets up a few opportunities beyond just extra revenue. For one, they trust your restaurant’s food and service enough to gift that experience to a loved one. That fact should be a boon to your whole staff! For another, the guest is setting up a future diner’s experience, which means another customer you get to impress. This could very well be someone who has never tried your food before. And implicit in the act of the gift is that your restaurant is a place they thoroughly recommend. That’s great word-of-mouth marketing in action!
There’s brand awareness that comes with restaurant gift cards. Include your name and logo on the card — as well as your phone number and address(es) — so that even if the giftee takes months and months to actually use it, they’ll be reminded of your business every time they open their wallet. This can be very useful, especially if you’re a small, locally owned restaurant.
Restaurant Gift Cards > Coupons
Some restaurant owners feel hesitation to incorporate gift cards because they worry it will be like offering discounts. But think of it like this: there’s the perception of more value and more legitimacy in a restaurant gift card compared to a coupon or other discount initiative. Selling gift cards for your restaurant won’t dilute your brand like pumping coupons into the market would. There is nearly zero loss on a redeemed gift card (as it’s already been paid for in full) and it doesn’t change the price of anything on your menu.
What else should I know?
There are some other things to keep in mind as you get started with restaurant gift cards:
Don’t include an expiration date. Unlike coupons, gift cards are treated like cash. Someone essentially paid you in advance, and if the giftee comes in with the card, even if it’s several years after the gift card was purchased, you should still honor the card. Beyond ethics, there are various escheat state laws that include unredeemed gift card value. To be safe, work with a vendor that won’t include penalties for inactivity and won’t place an expiration on your cards.
Consider offering different dollar levels, including amounts above your check total. If your average check is $25, consider also including $50 and $100 increments. Not only does this mean more upfront revenue for your business, but the more expensive gift cards come with a greater chance that the giftee will have leftover cash on the card, leading to a second visit. That means a second opportunity to win them over with your food and service.
And if the amount they have left over isn’t enough for a full meal, you’ll have some new revenue coming into your restaurant. If you’re using a gift card system where any amount can be put in at the gifter’s discretion, train your point of sales person (whether a cashier or a server) to look for opportunities to upsell to a higher increment.
Don’t forget about the potential for upselling the giftee when they come when they come in to use their card, not just upselling customers on buying a gift card along with their meal. After-all, if their check is smaller thanks to the gift from their friends or family, the giftee might not be as worried about ordering a little more, whether that’s choosing an appetizer or ordering a bottle of wine.
Consumers treat gift cards like cash; specifically, they see gift cards as their friends’ or family’s cash to spend. If the table mentions receiving a gift card (perhaps as an answer to “Is this your first time dining with us?”), that’s a cue to your server to gently up-sell.
Thinking about how you can boost your technology game? Download our free eBook “Choosing Restaurant Technology that Drives Profit for Your Business” today!
Download for free