Restaurant Gift Cards are one of the most popular types of gift cards. We love treating others to a great meal. It's also no secret running a successful restaurant is one of the most challenging business models. As a result, gift cards to a restaurants can be risky and those to smaller, local restaurants can be among the most risky.
Case And Point
Earlier this week, I was watching one of my new favorite television shows, Bar Rescue, and I was reminded of the risk involved when buying a gift card.
For those unfamiliar with the shows concept: Bar Rescue takes a Bar/Restaurant on the verge of closing it's doors, brings in an expert to make some dramatic changes and at the end of the week the business often has new branding, a better trained staff and a chance to fight another day.
The episode I watched rescued Swanky Bubbles in Philadelphia. The business was losing around $4,000 a month and was on the brink of closing it's doors. At the end of the show, there was an indicating the rehabilitation efforts did not pan out and the owners reverted back to the previous brand. After the show ended, I went to the Swanky Bubbles website and learned the sell gift certificates. Naturally, this would be a risky purchase.
While a gift card to a national restaurant chain such as the Chili's Gift Card is by no means immune to becoming worthless, typically there will be warning signs the business is in trouble and you'll have an opportunity to use your gift card before the doors close for good.
On the other hand, it can be difficult to determine the financial health of a smaller independent restaurant. Furthermore, when the owners decide it's time to call it quits, the doors often close abruptly and consumers are not given one last chance to redeem gift cards.
5 Gift Card Tips
While a smaller business may not be an open book when it comes to their finances or plans to stay in business, there are several things you can do to reduce the chances of loosing value of a gift ard while still support local independent small businesses:
- Buy a gift card to a place your recipient visits frequently. This way the gift card is sure to used sooner than later.
- If your familiar with the restaurant, take note of it's popularity. If the restaurant is empty during prime business hours, it's a sign the money may not be coming into the business.
- Take note of the condition of the facilities. If things are in disrepair, the business might not be generating enough cash to reinvest back into the facilities.
- Ask the staff: "How business has been?" or "How ling have you ben here?" If there is a revolving door of servers and bartenders it could be a sign tips are low or management is poor.
- If the business is frequently out of stock for items on the menu, it could be a sign there is not enough money in the bank to properly stock inventory.
In the end, I'm not suggesting consumers avoid gift cards to local business or restaurants. Just be aware of the risks, make a smart gift card purchase and decrease your chances of the gift card becoming worthless with the tips above.