Restaurants hoping for a robust holiday shopping season will have to make peace with the fact that many consumers are still cutting their spending, even on the most popular stocking stuffers: gift cards.
But even though several studies show spending on gifts and gift cards alike will remain weak this year, restaurants acknowledge they still need to capitalize on holiday traffic as much as possible by promoting gift cards aggressively and enticing shoppers from nearby stores and malls.
At McAlister’s Deli, gift cards have lost some of their effectiveness at driving holiday sales and first-quarter guest counts, said Phil Friedman, chief executive of the more than 300-unit fast-casual chain. McAlister’s will continue to promote its Deli Dollars gift cards, but a bigger push will be made to advertise the chain’s side dishes and iconic sweet tea as holiday catering options.
“We were very aggressive with gift cards the last few years, and last year they seemed to really lose their momentum,” Friedman said. “It seemed to move dollars from one month to the other, and last year’s January sales weren’t spectacular. So gift cards are in the mix this year, but not quite as prominently. They’re not the promotional leader.”
Several studies show that consumers still consider gift cards a staple of holiday shopping but will spend less on them this year.
The “Retail Compass Survey,” a poll of 100 chief marketing officers conducted by BDO Seidman, projected that gift cards would account for only 5 percent of retail sales this year, down from 12 percent in 2008’s holiday shopping season.
Aseparate report for the National Retail Federation found that, while gift cards would remain the most requested gift this year, holiday shoppers plan to spend less on them. The average amount spent per person on gift cards is projected to fall to $139.91, compared with $147.33 last year. Gift recipients also could expect the cards to contain lower dollar amounts, the survey showed, as the average gift card value is projected to drop to $39.80, compared with $40.54 in 2008.
The National Retail Federation’s report showed that restaurants still would be among the most popular places to buy a gift card, as 33.4 percent of gift givers surveyed said they would buy at least one gift card from a restaurant. Only department stores proved more popular with survey respondents, at 38.4 percent.
Chain and independent restaurants are offering extra discounts as an incentive for people to buy more gift cards.
IHOP, the 1,433-unit family-dining chain, will give a $5 coupon to guests for every $25 in gift cards they purchase now through Jan. 3, 2010. Bonefish Grill, a dinnerhouse brand in the OSI Restaurant Partners portfolio, not only will give guests a $20 bonus gift card for every $100 in certificates purchased, but it also will enter those customers into a sweepstakes for $5,000 in cash and a $5,000 donation to a local charity. And Paladar Latin Kitchen & Rum Bar, an independent in Woodmere, Ohio, will bestow a $10 bonus to those purchasing $50 in gift cards.
Some industry partners, such as Restaurant.com, will even do much of the heavy lifting for gift giving this holiday season. As part of its second annual Feed it Forward initiative, Restaurant.com will set up a giving website and Facebook application where customers can pass along one of 3 million restaurant gift certificates, loaded with $10 to a member restaurant, free of charge.
Cary Chessick, chief executive of Restaurant.com, said the company started Feed it Forward last year to put out a positive story amid all the doom-and-gloom news of the recession. The initiative lasts from Thanksgiving Day to Christmas Day, and the company expects more than 6,500 restaurants to participate.
“It’s not like we’re filling people’s pocketbooks with millions of dollars, but we’re giving them the ability to give someone something for free,” Chessick said. “The result is that a tremendous number of gifts are going to be given, and people will go to restaurants when they wouldn’t have had a chance to before.”
While Restaurant.com hopes to help Americans celebrate the gift of giving, Chessick said, the upshot for the company’s partners is to fill tables in January and the rest of the first quarter of 2010. The Facebook application, new this year to Feed it Forward, should facilitate more giving with a few mouse clicks, he added.
“The exposure for the restaurants and the people that will be coming in during Q1 and beyond likely will be a diverse set of people because they’ll be brought in through social networking,” Chessick said.
Different kinds of networks, like state restaurant associations or independent cooperatives, also can help restaurants sell more gift cards.
Cleveland Independents, an association of 80 Cleveland restaurants, is making an aggressive e-mail marketing push for The Deck, its pack of 52 $10 gift certificates for member eateries. Customers can purchase The Deck, a $520 value, for $30. In addition, branded Cleveland Independents gift cards are redeemable at any member restaurant and come with a “little black book,” or a directory of all the eateries in the cooperative.
Finally, special promotions for the busiest shopping day of the year, Black Friday, are popping up at independent and chain restaurants nationwide.
At Los Angeles restaurants Henry’s Hat and Luna Park, guests dining in for lunch or dinner on Black Friday will receive two gift cards equaling the price of their meals, rounded up to the nearest $5. For example, a $52 lunch at Luna Park would net a guest a $30 card to Luna Park and a $30 gift card to Harry’s, the restaurants said.
Some chains are offering holiday shoppers freebies or enticing deals on Black Friday. Caribou Coffee, a Minneapolis-based chain of 525 coffeehouses, will hand out free samples of Guittard chocolate, which is featured prominently in Caribou’s new line of chocolate and mocha beverages. The chain also will offer buy-one-get-one mocha drinks.
CB Holding Corp., parent to the Charlie Brown’s Steakhouse, Bugaboo Creek Steak House and The Office Beer Bar & Grill, is offering a free Chocolate Molten Cake with the purchase of any entree on Black Friday. The offer is open to members of Charlie Brown’s and Bugaboo’s loyalty clubs.
Contact Mark Brandau at [email protected].
