Gift cards spur higher full-service check averages

A recent study by Toast, a restaurant management technology firm, shed some light on  consumers’ gift card purchasing and redemption habits.

Toast analyzed more than 500 operations with at least one gift card purchase in 2015 through the firm’s gift card program and segmented the data by restaurant type. All gift cards were considered, including digital and print gift cards, as well as gift cards issued by Toast and imported from other providers. All restaurant segments include at least 15 different restaurants. Here’s a look at the numbers.

When visiting full-service restaurants, patrons with gift cards spend 72 percent more.

Guests with gift cards tend to spend much more on the check, especially at full-service restaurants. Toast compared two variables: total check amount partially paid with a gift card and total check amount not paid with gift cards at all. Bars, fine dining restaurants and pizzerias saw noticeably higher spending. In other segments, especially in quick-service, there was no real difference.

Gift cards should be promoted all year, not just in December.

Many restaurants only push their gift cards during the holidays, in the month of December. While this is a smart holiday restaurant marketing strategy, data shows that restaurants would actually benefit from promoting gift cards year-round.

In fact, nearly half of gift card sales (48 percent) occur in months other than December. Toast suggests compiling a list of all holidays in the U.S. for your marketing calendar, especially those relevant to your property (e.g., National Taco Day if you’re a Mexican restaurant). Then, two weeks out, promote gift card sales through email, menu marketing and receipts.

Wednesday is the best day to sell gift cards.

One might assume that gift card sales peak on weekends, when traffic peaks. But Toast’s data showed that Wednesday and Thursday were the top days. So promoting gift cards midweek could be more effective than promoting gift cards on weekends or during the end of the week.

Nearly a third of restaurant gift cards are never fully redeemed.

Many gift cards are just money in the bank for restaurant, as 29 percent of them are never fully redeemed. Toast analyzed how many gift cards were first bought in 2015 and compared that to how many of them were used until the end of April 2016. Over that year and a half, many restaurant gift cards were bought but never used, and a small amount of gift card sales actually translated to gift card spend.

Almost half of gift card users spend more than the gift card value.

When using gift cards, 45 percent of guests spend more than the card’s face value.

These results suggest a different mentality by gift card users. Perhaps the biggest takeaway is that gift cards are in fact treated as "gifts," and any spending restrictions  restaurant diners might normally follow are ignored—to the point where money is sometimes even literally left on the table. So any promotion that boosts gift card sales is most likely worth the effort.

Technology offers a number of tools to optimize a gift card program. Restaurants that integrate traditional and digital gift cards into their POS systems, for example, can improve sales and usage tracking, offer customized digital cards and link to a loyalty program to personalize the guest experience.