Restaurants are expanding the revenue potential from gift card sales by adding retail sales channels, promotional incentives, e-gift, mobile, and bulk sales.
One of the biggest hurdles in implementing or updating a gift card program is optimizing best practices for gift card accounting. This is because some of these new growth channels have both discounts and extra fees associated with them. Accounting practices can make the difference between a highly successful revenue generating program and one that has a negative impact on both a company and individual careers.
Let’s take a look at one of two crucial issues of gift card accounting: how to fund a discount. In the post, we’ll discuss how to track breakage. […]
The summer is in full swing and the holidays are probably the last thing on your mind. As much as we don’t want to think about snowflakes and holly branches, now is actually the best time to start thinking about your restaurant’s holiday-themed gift and promo cards. Here’s why:
In a recent survey, 73 percent of adults said they would purchase at least one gift card to give as a gift during the holidays. Those same adults said that 34 percent of the gift cards they planned to purchase would be for restaurants. With gift cards being such a hot item, restaurants should make sure they have an ample supply of holiday-themed cards and carriers.
The aim of many marketing efforts is to drive incremental guest behavior, like increasing guest spend or driving additional visits. But, how do you know if the behavior is truly incremental? How much of the lift is due to the campaign versus behavior that would have occurred anyway? Are we giving discounts to guests who would have been willing to pay full price? These are questions you may have heard from your finance team, franchisees and operators.
Reporting on incremental behavior can be difficult to answer with general marketing media such as TV and radio spots, billboards, or Internet banners. However, because of the one-to-one nature of your loyalty program, these are questions that can and should be answered.
To address these questions, we recommend implementing “target and control campaigns.” Target and control campaigns allow marketers to conduct real world experiments where the results are clear and easily understood.
Testing offers requires two groups that exhibit identical characteristics: A target group and a control group. First, define the population you want to target in your campaign. Your target audience could be just about any segment within your data such as all members who haven’t visited in the last 3 months, or all members who joined your program during the last quarter for example. Once you have defined your target group, the Paytronix software will automatically segment a randomly selected subset of the target population. During the length of the campaign, the control group should have the exact same experience as the target group except for the offer you are testing. In more advanced tests, you could further segment the test cell groups into sub-segments based on offers.
If you think you know how to uniformly account for discounted gift card sales or the costs associated with all of your sales channels, think again.
According to new rules from US GAAP and IFRS, the nature of the discount is changing – some of your expenses could be considered a reduction in revenue. Further, the question of when to take the expense and who funds it (your corporate office? Franchisees?) are of central importance.