Restaurants Leaving Money on the Table in Booming Business of Digital Gift Cards
Digital gift card giving is a booming business and is projected to grow 23% by 2025 — more than 2.5 times faster than overall gift card sales, according to a recent study by Incisiv, a Jacksonville, Fla.-based firm that helps brands navigate digital disruption.
The gift card market is a $160 billion industry that represents a significant source of revenue for U.S. restaurant brands. While growth in physical gift cards was 9% in 2019-2020, COVID-19 has accelerated the adoption of digital gift cards, as mobile and digital gifting increases and a younger demographic embraces e-gift cards, Incisiv learned in its recent study, “Evolution of Gift Cards in Fast-Casual Restaurant: From Transactions to Engagement.” While the analysis uncovered that the fast-casual restaurant industry is trailing the retail industry across most major areas, it pinpoints four areas of transformation that must be improved for restaurants to realize the full value of their gift card programs:
• Reduce friction by allowing faster, seamless purchase and redemption of e-gift cards. Sixty percent of restaurant digital gift cards that were evaluated take more than 24 hours to deliver. In addition, an average of 75% of restaurant brands evaluated do not enable gift cards to be added to the user’s mobile wallet. Physical gift cards don’t fare much better, as 60% take more than 10 days to deliver by mail. Restaurants are failing to meet shopper expectations for speed, convenience and simplicity, according to Incisiv.
• Improve omnichannel capabilities by enabling purchase, transfer and redemption of gift cards across all channels. Ninety-four percent of fast-casual restaurant e-gift cards can’t be sent via a text message — a clear miss in a mobile world, Incisiv stated. These restaurants must do a better job of integrating mobile, digital and physical channels or risk losing shoppers that expect a seamless experience, Incisiv stressed.
• Enable greater personalization so shoppers can customize gift cards and make them more personal. The vast majority of restaurants that offer e-gift cards allow the cards to incorporate personal messages, photos and videos, but they can improve the range of templates, designs and occasions for gift cards, Incisiv said.
• Provide recommendations that drive smarter sales with curated gift card options and relevant products. Zero percent of evaluated restaurants suggest gift cards in the search bars of their websites, Incisiv learned, stressing that restaurants are clearly leaving money on the table by failing to make relevant product recommendations.