BEHOLD THE POWER OF PLASTIC

Bob Krummert

It’s easy to make the case why restaurants should offer stored value gift cards: They provide immediate cash flow, they boost traffic, recipients who show up with them tend to have larger transactions than normal and also tend to spend more than the face value of the card. But, lately, the story has gotten even better, particularly now that more restaurant operators have embraced reloadable gift cards.

Much of the embracing has come in the wake of the Starbucks Card, the pioneering reloadable card that now accounts for a whopping 11 percent of Starbucks’ North American sales. Ever the innovator, the coffee giant has recently rolled out a program that allows parents to reload their child’s Starbucks cards via a bank card link. Which is to say, Starbucks is generating cash automatically from people who do not frequent their stores. Who wouldn’t want to have something like this as part of their business model?

For now, a whiz-bang system like this one is more than most operators would want to tackle. But you may wish to note a much more accessible gift card breakthrough recently made by full service chain Chili’s. The Chili’s gift card is nothing out of the ordinary, but its method of distribution certainly is.

Not only can consumers buy the card at a Chili’s restaurant or on the chain’s web site, they can also pick one up at the checkout counters at mainstream retailers like Walgreen’s, CVS and Safeway. It may be worth investigating whether merchants in your trade area would be willing to cut a deal that would have them sell gift cards from your restaurant in their store next Christmas.

And if you’re just getting your feet wet with gift cards this holiday season, don’t expect immediate gratification. Fast casual outfit Panera Bread reports that card sales this year are up 200 percent over 2003, when its card debuted.

Two final gift card statistics to ponder: The National Retail Federation’s 2nd annual gift card survey found that 74.3 percent of consumers will purchase a gift card during the 2004 holidays, up from 69.9 percent last year. Even better, the average person purchasing a gift card this year will buy 3.38 cards for a total of $108.28. How can you not get in on this action?