• by Karlene Lukovitz  @KLmarketdaily, November 10, 2010

Along with holiday sales in general, gift cards are expected to rebound somewhat this holiday season -- and restaurants should be among the big beneficiaries on the gift-card front.

Total holiday gift-card sales declined for the second year in a row last season, from $24.9 billion in 2008 to an estimated $24.1 billion in 2009, according to the National Retail Federation (NRF), although First Data Corp., an electronic commerce and payment processor, reported that the total dollar value of gift cards activated increased 2.1% (with the number of cards sold essentially flat).

However, with NRF projecting an overall increase of 2.3% in retail sales and 57% of respondents in its annual holiday consumer intentions survey indicating that they will request gift cards (making them the top wish-list item) -- not to mention new federal rules that make gift cards more consumer-friendly (they can't expire for five years after purchase date, for example) -- all signs point to growth for these easiest-of-all gifts for this season. (On a year-round basis, 78% of adults say that they would like to receive restaurant gift cards on gift occasions, according to the National Restaurant Association.)

The indicators also look promising for restaurant gift cards in particular. Last year, restaurants accounted for 31% of all holiday gift cards purchased, compared to 29.3% for department-store gift cards, according to NRF.

Further, the total dollar value of restaurant gift cards activated last holiday season rose 5.8%, and the number of these gift cards sold rose 5.6%, reported First Data Corp. Average value for restaurant gift cards was $18.09 in 2008 and $18.13 in 2009.

Adding to the hopes for the holidays: Restaurant gift-card sales rose significantly during this year's first half. At QSRs, the number of cards sold rose 12.4% and their total dollar value rose 14%, with the average gift-card amount up 1.4%, to $13.45, according to First Data numbers reported in Nation's Restaurant News. Moreover, the dollar value of reloads of QSR gift cards rose 47%, compared to a 25% increase for all types of merchants. At casual dining restaurants, the number of gift cards sold grew 6.1%, and their total dollar value rose 4.7%, although the average card amount declined by 1.2%, to $28.54.

The tremendous growth of online/mobile gift-card ordering should also spur sales: Restaurant gift cards are expected to be the most popular type among online gift-card buyers this season, according to Heyward Whetsall, president of restaurant industry marketing consulting firm Heyward Whetsall Associates.

Uno Chicago Grill, the first casual dining chain to offer virtual gift cards, starting with the 2008 holiday season, saw its gift card sales double in the two weeks before Christmas as a result of the ability to email these gifts, reports Whetsall, in RestaurantReport.com.

At this point, all major QSRs, and most chains of any size across formats, not only offer online gift-card ordering/delivery capabilities, but promote gift cards both online and in-store. (In addition to their last-minute and convenience factors for consumers, virtual gift cards are less costly for the restaurant, since they don't have to be delivered -- and also allow restaurants to gather and track data on customers and prospects for marketing purposes.)

Increasingly, restaurant chains are employing their Facebook fan pages and Twitter and other social media presences, as well as their email clubs and promotions on their sites, to capture gift-card dollars from loyal customers, particularly for those last-minute gift dilemmas, Whetsall confirms.

To further drive sales, sophisticated restaurant marketers offer personalization options such as unique designs, photos and messages (surveys show that personalization is critical in encouraging gift-card sales), and offering cross-incentives, such as "purchase a $50 gift card and get a $10 gift card for yourself," he reports.

Applebee's -- to name just one big chain in the game -- launched digital gift cards in September, which can be purchased either through Facebook or its Web site. Capabilities offered include personalization with photos or even recorded voice or video messages, Facebook posting, text notifications and receipts and ability to purchase now for future delivery.

Smaller chains are also on the case. Examples include Culver's, a family-oriented chain with 400 locations concentrated in the upper Midwest, which is offering e-gifts by Facebook or email, and White Castle, which encourages fans to buy gift cards, along with a host of other branded items, online as "stocking stuffers."