Weak gift card sales could be an obstacle to full recovery for restaurant chains, reported The Wall Street Journal (Dec. 1).
As COVID-19 cases rise, more restrictions are being placed on restaurants and less people are dining out. Seated diners at U.S. restaurants were down 48% from a year ago as of Sunday, according to OpenTable, while many independent restaurants have closed.
More than half of restaurant gift card sales occur around the holidays, according to Wells Fargo Securities analyst Jon Tower. Restaurants book revenue from the gift card when it is redeemed instead of when its sold, resulting in meals paid for with a gift card traditionally accounting for a significant amount of first-quarter sales. In 2019, redemptions accounted for 14% of first-quarter restaurant sales at Outback Steakhouse and 9% at Cheesecake Factory, according to Tower.
This year, with foot traffic down, it is a high risk of gift card sales being low. However, digital ordering has made buying gift cards on the web/via an app easier.
Restaurant chains have also been running gift card–specific promotions to encourage consumers to purchase them. For example, Chili’s is offering diners a $10 gift card free with a $50 gift card purchase.
Through Dec. 24, Outback Steakhouse is offering a drive-up concierge service for gift card shoppers, reported FSR Magazine (Nov. 30). Customers can call ahead or visit their local Outback and pull into a designated Gift Card Drive-Up parking spot and an employee will come to their car and complete the gift card purchase. Like Chilis, the company is offering a $10 gift card when a $50 gift card is purchased.
“Outback Steakhouse created Curbside Take-Away in early 1990s and now we’ve applied that concept to gift cards just in time for the holidays,” says Danielle Vona, Outback chief marketing officer. “Our goal is to create a ‘no worries’ experience this holiday shopping season.”
The Cheesecake Factory ran a promotion from Nov. 23 through Cyber Monday (Nov. 30) that offered consumers two eSlice of Joy Cards for every $25 in gift cards or eGift cards purchased online, reported FSR Magazine (Nov. 23). eSlice of Joy Cards and Slice of Joy Cards are each redeemable for one complimentary slice of The Cheesecake Factory’s cheesecake beginning Jan. 1, 2021 through March 31, 2021.
Smaller chains are also doing what they can to promote gift card purchases during the holiday season.
TooJay’s Deli is giving customers a $5 bonus card for future use with every $25 of TooJay’s gift cards bought through Dec. 24. The gift cards are redeemable from Dec. 26 through Feb. 28, 2021. Quick-service chain Taco John’s is also running the same promotion.