Dive Brief:

• Restaurant gift card sales still lag pre-COVID-19 pandemic levels, and that trend could persist “for the next several years,” according to a mid-year report released Aug.15 by Paytronix, a software provider for the foodservice industry. 
• Compared to the first half of 2021, restaurant gift card sales for the first six months of this year were down about 2%, Paytronix said. Holidays like Valentine’s Day, Easter, Mother’s Day and Father’s Day as well as graduation season provided the biggest lift for gift card sales for the first half of 2022.
• Consumers still prefer to give physical gift cards over digital ones, with sales of the former higher than those of the latter in the first half of the year, per the report. Sales of physical gift cards tended to peak in the run-up to a holiday, while sales of digital cards were highest on the holiday itself.

Dive Insight:

The restaurant industry has been faced with a number of pandemic hurdles, including the spread of the omicron variant earlier this year and its effect on sales.

Typically, sales of gift cards in November and December make up almost half of gift card sales annually, with May and June providing the second-biggest spike, according to Paytronix. But gift card sales in January, March, May and June of this year were down compared to the same months last year. 

Gift card sales “have yet to fully recover from the effects of the pandemic,” and this “new normal” is unlikely to disappear soon, the report predicted.

Although gift card redemption rates for fine-dining restaurants rose 2% for the first half of this year over the 2021 period, such rates for quick-service restaurants dropped 10%, per the report. Most gift cards are redeemed within 30 days of their purchase; those not used within 6 months are unlikely to be redeemed at all, Paytronix noted.

Reflecting the industry changes due to the pandemic, Paytronix reported in May that in-store restaurant sales had slumped from their January 2020 peak, but digital ordering had increased during that time. 

For the latest mid-year report this week, Paytronix gathered data from the aggregate gift card sales for 277 restaurant merchants through June 30.