Why Guests Spend 20% More with Restaurant Gift Cards

By: Ellie Mirman

3 Minute Read

Nov 15, 2017

gift cards spend more

More than $100 billion is spent on gift cards annually, most of which is spent during the holiday season which is still so fresh in our minds.

Restaurants are often the focus of such sales - both in terms of gift card purchases and general (Visa, MasterCard, American Express) gift card redemption. And that’s a good thing for restaurants, because gift cards offer a great opportunity to get new customers in the door, repeat customers back, and all customers spending more.

On average, gift card recipients will spend 20% more than the value of their gift card and 75% of those who overspend spend a whopping 60% more than the card’s value. Why? The psychology behind consumer spending reveals valuable insights.

Restaurant Gift Cards Allow Guests to “Treat Yo’ Self”

treat yo self

Gift cards are more often used to buy luxury items - things that a consumer wants, rather than needs. This could be because the consumer feels they should treat themselves to a true “gift” or because they feel less guilty on the splurge when using a gift card rather than a credit card or cash.

A recent study on gift card spending found that, “While gift cards technically could be used to buy mundane things like textbooks or paper towels, we find that this feels like a misuse of the card. When paying with a gift card, people forgo buying everyday items in favor of buying indulgent items.”

Virtual Money = Virtual Spending

There is normally a psychological hurdle when consumers shop because they don’t want to part ways with their money. But the more abstract that exchange becomes, the easier it is to overcome that hurdle. Using a gift card instead of a credit card or cash takes the consumer one step further from the feeling of losing money.

Using a digital gift card can further abstract the feeling of spending money. The average amount loaded on a digital gift card is around 10-15% more than a plastic gift card. Moving more and more of the purchasing process to a digital flow helps lower the hurdle to spend.

Digital gift cards continue to gain popularity. Online gift card sales are growing 29% year over year, and companies like Starbucks are seeing record sales with the use of mobile apps and wallets. Yet less than 3% of local businesses sell their gift cards online, leaving those gains to the big merchants on the block.

restaurant gift cards study

Once You Pop, You Can’t Stop

Once someone starts spending, it’s much easier to get them to keep spending. With the initial psychological hurdle of spending money overcome, a restaurant can benefit from the momentum - and endorphin rush - of a sale to increase that ticket size.

But there’s an unforeseen problem: billions of dollars in gift cards are never spent each year. While this may feel like “free money” to the business, it would actually be more beneficial to get those consumers in the door to spend their gift cards - and more. The primary reasons gift cards go unused? 51% say they didn’t have time and 41% simply forgot, according to a survey. Simple things like marketing reminders or online ordering options may help boost those redemption rates.

What’s a smart restaurant owner to do? Offer gift cards - and promote that you have them. Make gift cards available in-store and online to capture all possible interest. For more stats and marketing tips, check out our previous article on restaurant gift card stats, charts, and tips.

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