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Paytronix Restaurant Gift Card Report Examines Impact of Pandemic on Gift Card Sales and Redemptions

Paytronix Systems, Inc., the most advanced digital guest experience platform, published the Paytronix Annual Restaurant Gift Card Sales Report: 2021, which finds that overall, 2020 card sales fell by 31.8% when compared to 2019 sales. With that in mind, quick-service restaurants (QSRs) came away the big winners by collecting a larger share of the market while full-service restaurants (FSRs) took the biggest hit. The holiday season remained a strong sales period for restaurants and accounted for more than 45% of all 2020 gift card sales.

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COVID-19 upended the hospitality industry in March and continued to wreak havoc throughout the rest of the year. Fortunately, restaurants are among the most resilient businesses out there, and brands nationwide stepped up to the challenge, pivoting to online ordering, getting creative to keep guests safe on-premises, and redesigning their business models overnight to keep up with a rapidly evolving crisis.

“The executives in the restaurant industry are some of the most creative and innovative in the business world, so our bet is that we’ll see a great recovery as we head into 2021. We’re also seeing the demand for convenience increase, which will have an effect on e-gift, physical gift cards, and loyalty programs combined with stored value, as restaurants start to use all the levers of the single platform to drive visits,” said Michelle Tempesta, head of product and marketing for Paytronix.

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The Paytronix Restaurant Gift Card Sales Report identifies several trends in closed-loop restaurant gift card sales and insights into the value of gift card programs in the industry during a turbulent, unprecedented year.

  • Quick-service restaurants fared well. QSRs, the service type that was best positioned to weather the pandemic due to its emphasis on takeout and drive-thrus, nearly matched its 2019 sales, realizing more than 96% of the number of cards sold in that year – a nearly negligible decline when compared to other restaurant segments.
  • In-store and third-party card sales were affected differently. In-store card sales fell less than 20% compared to 2019. Third-party sales declined most significantly: the number of cards sold through this channel fell 45.7% year over year. Cards sold through corporate channels fell 36.5%.
  • E-Gift card average load rose. In 2020, the average load amount on an e-gift card to a QSR was more than double the average load for a physical gift card.
  • May/June reflected the most depressed sales period. The number of gift cards sold during this period was significantly lower than in 2018 and 2019. The traditional Moms, Dads & Grads season presented a challenge for restaurants as many were just beginning to fully reopen for on-premises dining after state-mandated closures went into effect in March.
  • Card redemption was swifter. Gift cards were redeemed more quickly in the first 11 weeks after purchase as compared to 2018 and 2019. After the 11-week mark, cards sold in 2020 were less likely to be redeemed than those sold in 2019 or 2018.

“In-store sales realized the smallest decline in number of cards sold between 2019 and 2020, which we attribute to some brands running successful promotional offers, like 10% off or bonus card offers, that were not available at third-party retailers,” said Lee Barnes, Head of Data Insights, Paytronix.

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