Gift Card Question

We had an issue with Groupon/Living Social certificates being presented 3 & 4 years after the expiration date and i was obligated to honor the purchase value. That always irked me because the consumer doesn't have to uphold their end of the deal by using the certificate by date certain. Particularly when the justification I used to participate was predicated on 30% not being redeemed.

This bothers me to hear this from restaurant/business owners/managers. To me, the whole point of Groupon (at least, back when it first started) was to introduce you to new restaurants or businesses that you have never visited before. They, along with Living Social, introduced me countless new places - mostly restaurants. That is how I first discovered Burning Bush Grille, in fact.

I feel that if a business decides go the Groupon route, they take any loss out of their advertising budget. That's what it is - advertising, and trying to entice new customers or to remind those who haven't been in the past few years. It shouldn't be, in my humble opinion, used to make money in hopes that customers will purchase a voucher and then fail to redeem it.

Sorry for the sidebar. To stay on topic, I'll add this - if a gift card specifically says it is only valid at locations A, B, and C, I wouldn't be upset if I couldn't use it at location D. But if it does not list any restrictions, I would 100% expect my card to be accepted.

This bothers me to hear this from restaurant/business owners/managers. To me, the whole point of Groupon (at least, back when it first started) was to introduce you to new restaurants or businesses that you have never visited before. They, along with Living Social, introduced me countless new places - mostly restaurants. That is how I first discovered Burning Bush Grille, in fact.

I feel that if a business decides go the Groupon route, they take any loss out of their advertising budget. That's what it is - advertising, and trying to entice new customers or to remind those who haven't been in the past few years. It shouldn't be, in my humble opinion, used to make money in hopes that customers will purchase a voucher and then fail to redeem it.

To clarify; I do consider this a form of advertising expense however, while making a decision on how to spend your advertising dollars and how much you want to spend you consider all factors and the fact that only 70% of gift cards purchased are ever redeemed is a factor when considering of how to get the biggest bang for your buck. On Groupon/Living social it is generally an even split of the "purchase price" of the certificate. So if you do a $20 for $10 deal the business owner receives 1/2 of the $10 or, $5.00. The consumer then gets $20 worth of food and drink. I can tell you that I have not figured our how to "make money" on this deal. Labor cost are 15-20% and food cost are 25-35% of a typical restaurant. I am making 25% on the aforementioned deal. This is always a money losing proposition and, IMHO, only serves in part to build business through trial. Most of the 1400 certificates we sold went to exisitng customers, we did drag some one timers out to us from inside the Watterson but they are not going to add us to their normal flight pattern. The balance of the users are coupon people who won't eat anywhere unless they have a coupon. The people I take issue with are the ones who buy the deal knowing it is a limited time offer, fail to adhere to the terms and then wonder in 2-4 years past the expriation date and want to use the darn coupon for the face value. I do not believe that is the intent of the offer and while I honor them, (in part because it is part of the certificate) it still irks me. Thankfully, it is a very, very, small number of consumers who do this. Just wanted to clarify my statement.

I did see a story on InsiderLouisville.com (I think that's where it was) talking about the Aspen Creek sale and how they were planning to open one in the former Champps/ Fox and Hound location by Oxmoor.

Also saw a story there about First Link being up for sale. I dropped in there once to see what it was. It's very much out of my way and has a weird ambiance, but everyone was very nice. One of the workers carried our groceries to the car; I think to reassure us that it was a safe place to visit as much as anything.

Any purchaser of a restaurant that does establish a means to cover outstanding gift certificates and coupons makes a grave error. The seller got the money. The seller will not be incurring the expense to honor outstanding GCs. The buyer should insist on credit at purchase to offset those GCs. Why should the seller get to keep the money to cover the GCs? The purchaser will bear the brunt of the dissatisfied customer. Since the restaurant's good will is being sold by the seller, it is unfair for the seller to keep money that will reduce the good will for which the buyer paid good money.

All of our stores are franchisee owned. The franchisees as a collective group cannot agree on a gift card program (or loyalty program or marketing program or...or...or...), so gift cards are left to a store-by-store basis. Stores are required to create their own gift cards or participate in the program we have approved. If they create their own gift cards, the cards are required to state clearly that they are store specific.

Ronnie, could the franchise agreement have a clause requiring F'ee to pay over to the F'or all funds received on GCs and then the F'or to use those funds to reimburse each F'ee who honors the previously issued GC? Like there is an selling F'ee and a cooking F'ee. There's no reason for the selling F'ee to keep the money - it didn't incur any expense to produce anything to honor the GC. The cooking F'ee did that and so the cooking F'ee gets reimbursed when it turns in the cashed-in GC to the F'or. If you're worried about the selling F'ee keeping (stealing) the money, it is no different that a F'ee cheating on its franchise fee or any other kind of F'ee malfeasance. Use numbered GC's and have some kind of reconciliation on the routine sales reports.