What Is a Restaurant Loyalty Program?
2024 is poised to be a good year for the restaurant industry, according to the National Restaurant Association’s State of the Restaurant Industry 2024
2 min read
Gift cards are a key part of the guest engagement ecosystem often acting as a way that guests can share their favorite brands with others. Also, in today’s mobile-oriented world, e-gift with recharge acts as a way for guests to store value that they can use for regular orders. So choosing the right provider is key.
Gift Card Tips
Gift cards help you extend your brand presence beyond your locations by expanding your channels and meeting your guests where they are. You can also offer online or virtual gift cards. Beyond that, you can expand to third-party and discounted third-party retailers, but remember that this step adds complexity. It’s important to know the limits of your spreadsheets by tracking sales fees, discounts, breakage across programs, and money movement between locations.
Investing in a Gift Card Solution
When selecting a gift card software provider, you need to make sure that the platform delivers the automation you need, so that you can avoid having to manually track gift card costs and discounts. Discount tracking is a huge part of this automation; it helps you recognize the expense card-by-card and transaction-by-transaction.
You also need a provider that can help you track money movement (both centralized and decentralized) across different stores, franchises, and corporations.
Tips for Managing a Successful Program
- One of the most time-consuming processes in this realm is reconciling gift card sales and redemptions across different systems. Robust and trustworthy reporting on liability and redemption can help you be prepared for audits.
- Avoid guest friction by making it easy to purchase, redeem, and check the balances of gift cards, and ensuring funds are redeemable both at the point of sale and for online ordering.
- Keep your franchisees happy by ensuring that accurate, reliable, timely, and automated settlement funds are available.
- Keep your guests happy by considering comp cards instead of gift cards; gift cards can add extra layers of complexity for your accounting.
| Gift Card | The Differences | Comp Card |
| Purchased by customer | Issue method | Purchase by restaurant |
| Liability | Financial classification when issued | Expense |
| Revenue | Financial treatment upon redemption | Expense |
| Yes | Sales tax & income tax | No |
| Yes | Subject to tax escheatment | No |
| 5 years | Minimum expiration period | None |
[Image: Comp cards vs. gift cards slide]
10 Tips for Making the Change
- Make sure that you own your data and can easily access it.
- Create a team that handles gift card migration; this involves marketing, IT, finance, and operations.
- Streamline the migration process to ensure all appropriate parties are weighing in.
- Understand the timeline of the process so that your customers do as well.
- Perform POS configuration and testing to ensure success.
- Make an inventory of your current gift card stock to ensure you can meet demand.
- Integrate online ordering so that the customer experience is as smooth as possible.
- Consider third-party channels, while understanding that they add complexity.
- Consider e-gift cards for added convenience.
- Be sure your new provider matches or improves your current reporting.
How Gift Card Programs Can Serve Your Strategy
Gift cards can be a key part of a larger guest engagement strategy. When combined with loyalty programs, ordering, and comp, they can create real and lasting value, as long as they are smoothly aligned with each other.
Listen to the Paytronix podcast with restaurant and retail analyst Ryan DiLello here.
