Restaurants Turn to eGift Cards to Smooth Recovery

As restaurants recover from the devastating effects of 2020 and face new virus-, labor-, supply-chain and inflation-related challenges on an ongoing basis, eGift cards are a vital tool to provide much-needed additional revenue and to acquire new customers.

The Restaurant Gift Card Sales Report 2022 from the restaurant Software-as-a-Service (SaaS) company Paytronix reveals that restaurant gift card sales may not have recovered to pre-pandemic levels, remaining 13% below 2019 sales – but in 2021 they were up 22% relative to 2020. Moreover, fine dining gift card sales grew 57% during the year, and family dining gift card sales were up 106%.

Andrew Robbins, co-founder and CEO at Paytronix, spoke with PYMNTS’ Karen Webster in a recent PYMNTS TV interview about the value that digital gift cards can create for restaurants.

“In restaurants, there’s typically 25 to 30% that people spend beyond the gift card [value],” Robbins said.  “If you think about it, [the gift card] was given as a treat, and so you’re going to treat yourself.”

Additionally, the study found that, across dining categories, consumers spend more on digital gift cards than physical, such that these eCards open up even greater sales opportunities.

A Foot in the Door

Gift cards can function as a referral, Robbins pointed out, with a person’s friend or relative having specifically selected that restaurant to suit their taste. Additionally, since gift cards tend to promote positive dining experiences, those customers are more likely to come back.

“Everybody likes a good referral, so that’s a great guest that’s coming to visit you,” Robbins said, “and then they eat for free, so they’re going to be a little bit happier about the meal.”

Given the higher spending that gift cards tend to yield, consumers may be more likely to order another beverage or dessert that they might otherwise not have purchased, contributing to their satisfaction with the overall experience.

Moreover, Robbins noted that data from consumers’ checks reveal that gift card users are more likely to order more entrees, suggesting that they are bringing more people with them to the restaurant – perhaps as part of a group celebration. As such, gift cards help the restaurant reach not only the card recipient, but also the others in their party.

A New View of Loyalty

As restaurants attempt to tackle labor challenges, many have been drawing inspiration from the strategies that have proven effective with consumers in order to guide their efforts with their employees. For instance, Robbins noted, some restaurants are adding employee loyalty programs.

“It does two things: a currency with an incentive to keep them, but also a communication method,” he said, adding that, through these programs, restaurants can surface messages about the company’s ongoing initiatives and about new changes.

Additionally, these programs can make it easier to incentivize referrals, rewarding employees for bringing their friends onboard through the loyalty program’s currency features.

Certainly, loyalty programs have caught on with consumers, according to data from the most recent edition of PYMNTS’ Digital Divide Report: Technology as A Catalyst For Restaurant Purchases, created in collaboration with Paytronix. The study found that roughly four in 10 restaurant customers say rewards programs would encourage them to make more purchases.

Read more: QSRs Chase Tech-Savvy Diner Spend With New Digital Tools

Moreover, findings from the January edition of the Digital Divide series, “The Digital Divide Report: Minding The Loyalty Gap,” which drew from a survey of more than 2,400 U.S. adults conducted in the fall, noted that 61% of respondents had earned loyalty rewards for their spending in the previous thirty days.

Read more: Restaurants Compete to Make Loyalty Programs Stand Out as Consumers Join Multiple Programs

Watch This Space

Workforce challenges are already resulting in a wave of innovation among restaurants and technology providers, with automated solutions emerging to reduce labor needs. These advances take many shapes: robots at every link of the supply chain, from picking and packing to food preparation to delivery, and also consumer-facing digital technologies such as QR code menus and digital ordering tools.

Robbins argues that, where once these sorts of technologies would have detracted from the dining experience, now consumers expect them. He added, “People are looking for multiple avenues to make their life easier, and also make it more efficient for the restaurant chain.”

Overall, the challenges facing the industry are very real, but there is an upside for restaurants: the recovery of consumer demand.

“[Operators are] still challenged by supply chain, inflation and a fight for employees…If it’s not one thing, it it’s another,” Robbins said. “But there’s optimism about consumers coming back.”

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