Definition
Gift card
A gift card is prepaid stored value sold to guests, counted as a liability until it is redeemed and doubling as a low-cost acquisition and loyalty tool.
A gift card is prepaid stored value: a guest pays you now for a balance that someone redeems later, as a physical card or a digital code sold through your Point of sale (POS). On the books it is a liability, not revenue, until it is spent (you have taken cash but still owe the food), which is exactly why it is useful: it is money in the door ahead of the cost of serving it.
Beyond the cash float, gift cards are two marketing tools in one. They are acquisition, because a card bought as a gift brings in a new guest who might never have found you otherwise, and they lift spend, because redeemers routinely spend more than the card's face value and some cards are never fully redeemed at all. They also pair naturally with a Loyalty program and feed First-party data when they are digital and tied to an account.
The appetite for digital is real: among consumers not enrolled, 81% say they would join a favorite restaurant's program if offered one, and 60% of current members prefer a phone app to a physical card, the same shift that moves gift value off plastic. Gift and stored-value features are built into POS and loyalty platforms such as Toast, Square for Restaurants, and Paytronix. See loyalty and retention.
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