Restaurants do not lose any money from selling restaurant gift cards. In fact, they are getting paid before they even cook food for anyone. The benefit behind restaurant gift cards is easy referrals. If someone eats at a particular restaurant and they really enjoy the food, they may want to recommend the food to someone else.
But often times, people who receive verbal recommendations don’t often act on them.
They need an extra incentive to actually visit the restaurant and try the food out in person.
That is where gift cards come into play. People will often purchase restaurant gift cards as a way to get their friends and family to try the food of a particular restaurant.
So when they go there and try the food for free with the gift card, their insecurities about the restaurant may change if they enjoy the food. Then in the future they may be willing to go back to the restaurant as paying customers who simply want a nice meal. Therefore, restaurant gift cards are an excellent way for these establishments to generate referrals.
There is no doubt that gift cards create an extra mode of advertising for the restaurants.
These establishments distribute their gift card products to a number of third party retailers such as CVS, Walgreens, Wal-Mart and Target. Restaurant gift cards can also be purchased online.
This means when people are shopping at these stores, they will see restaurant gift cards advertised in the checkout line near the cash register. Since the checkout line is the area where people like to impulsively purchase items, this creates an incentive for them to want to purchase a gift card to a restaurant they have never tried before.
Either that or they will purchase the card for someone who they know will appreciate the card. As for the restaurants, the only money they have to pay is a sales percentage to the stores for selling their gift card products. But they just factor this into their advertising costs, which are considerably less in comparison to the costs of television and magazine advertising.
Finally, when people go to eat at a restaurant they don’t normally calculate how much everything is going to be. They just kind of estimate in their heads what the total cost will be while they are ordering.
Chances are that someone with a gift card will end up having to pay additional money because they don’t have enough credit on the card to cover their bill. So ultimately, the restaurants earn more money from people who pay with gift cards.