Which Restaurants Take the Cake When It Comes to Gift Card eCommerce
April 10, 2018
Learn which Casual Dining and Quick Serve restaurants are excelling in gift card ecommerce and where both are leaving money on the table.
The 2017 Merchant Gift Card E-Commerce Evaluation, a study conducted by NAPCO Research and sponsored by CashStar, revealed some interesting insights about the gift card programs of ecommerce brands across a number of industries. The overall study evaluated 100 of the most recognizable ecommerce brands in North America and rated them on no less than 98 criteria. The results for the restaurant industry—broken into two segments: Casual Dining and Quick Serve—echoed some of the larger findings, but also had some nuanced results.
Both Casual Dining and Quick Serve restaurants have opportunities for improvement in gift card programs. The overall average score for all merchants evaluated was 42%, while Casual Dining had a higher average of 54% and Quick Serve’s average was 37%. Each industry segment had standouts, though even the leaders scored imperfectly. Across the board, there are some key areas with opportunities for all brands to improve their gift card programs.
Leaders in Restaurant Gift Card eCommerce
The Casual Dining vertical scored well above the cross-industry averages in the B2B (75%), promotions (66%) and checkout/post-purchase (66%) criteria of the study. Overall leaders in the segment included Texas Roadhouse (65%), IHOP (63%) and Red Lobster (63%). As a whole, Casual Dining restaurants earned ratings of 60 percent in recipient experience, 50 percent in discoverability/awareness, and 48 percent in the flexibility of its gift card offerings.
Quick Serve restaurants, which included 12 brands, did not perform quite as well as its Casual Dining counterpart. The segment earned an average score of 37%. Top performers in this segment included Starbucks (58%), Chipotle (57%) and Dairy Queen (53%). Quick Serve restaurants scored the highest in the B2B category (72%), checkout/post-purchase (45%), and primary customer journey (44%).
It’s clear that B2B and checkout/post-purchase are priorities for both Casual Dining and Quick Serve restaurants; however, lower scores in some of the other categories point to some gaps in gift card ecommerce programs that are likely resulting in missed profits. We look at some of the greatest untapped opportunities below.
Restaurant Merchants Need to Serve Up More Flexibility
Restaurant scores in the gift card offering flexibility category ran the gamut. Across all brands—this category had one of the lowest overall average scores. Restaurants in the Quick Serve segment scored from 0% – 62%, while their counterparts in the Casual Dining segment ranged from 8% – 68%. This is a critical area deserving of attention; as sophisticated consumers continue to expand online shopping preferences across desktop, mobile web, and mobile apps, restaurant merchants must adapt.
In looking at how many channels on which gift cards are offered and the types of cards offered, there is a wide arch of opportunity for many restaurant merchants to better tailor their offerings to meet customer demand. Online shoppers are looking for increased personalization, and gift cards are no exception. Restaurants should look to new and unique ways to engage guests across channels, including:
- Offering physical, digital—via their own direct marketing and third-party B2B channels—all table stakes at this point
- Increasing the number of card designs for both physical and digital cards
- Catering to a wide breadth of occasions and offering generic designs with personalization options
- Enabling customers to add a personalized (text, video, audio) message
- Not restricting personalization options via character limitations in message fields or “To” and “From” fields
- Offering more denominations
- Enabling custom delivery times
- Providing a variety of payment options, across all devices
- Increasing communication with purchaser post-purchase
Every Channel Needs to be on the Menu
Omnichannel should be a priority for restaurants across the board. Of the Quick Serve restaurants in the study, the average score in the digital gift card category was 43% and the average was 30% for physical gift cards. Casual Dining restaurants scored slightly higher, earning an average score of 60% for digital gift cards and 55% for physical.
The disparity in customer experience across channels was highlighted in the overall NAPCO Research study as well, where only three merchants had mobile purchase experiences on par or slightly better than the desktop experience. In the overall study, only 36 merchants sell both digital and physical gift cards across all channels (desktop, mobile web, and mobile app), and even in those cases, the experience across those channels is typically not equivalent to the desktop experience.
Promotions Not a Priority With Quick Serve
One somewhat startling finding from the report is that Quick Serve restaurants are not as focused on gift card promotions as they could be. Of the 12 brands included in this segment, a majority (eight) scored 0% in this category. While other verticals in the NAPCO Research study commonly use gift cards to drive behaviors in marketing programs via gift card promotions, Quick Serve restaurants did not.
The use of gift cards as incentives in ecommerce marketing programs as part of a holistic marketing strategy does not seem to be on the Quick Serve radar. Casual Dining, on the other hand, earned a 66% average in this category, with the majority of brands (10) scoring a 50% or higher. The Cheesecake Factory is a standout example of how brands can incorporate gift card promotions into overall brand marketing:
Restaurant merchants across both segments should consider using gift cards to boost registrations for subscription services, increase loyalty program engagement, and to promote the use of specific payment methods.
Both Casual and Quick Serve restaurants have ample ground to cover to meet the high demand—and expectations of today’s consumers. Offering both digital and physical gift cards across all channels is just one way in which restaurant merchants can meet expectations—they should also give equal priority to providing a seamless and engaging experience across channels. In order to improve gift card ecommerce offerings restaurant merchants must take a bird’s eye view of their online gift card programs. This will require increased in-house collaboration and partnership with external platform providers and fulfillment partners. The best gift card ecommerce programs will live at the intersection of technology, best practices, and gift card expertise.