Understanding Comp Cards Vs. Gift Cards for Restaurants

Getting new customers through the door and motivating previous ones to return (and ideally increase their order size) is the cornerstone of any restaurant business. Two tools that can help you achieve that are gift cards and complimentary gift cards, or comp cards. Although similar, they have different uses different ways they are managed. 

This article covers the key differences between gift and comp cards, their best uses, and how to maximize their benefits and minimize the potential downsides. 

Gift Cards Vs. Comp Cards: What's the Difference? 

It’s easy to think gift and comp cards are the same; however, gift and comp cards differ:  

• Gift Cards: Gift cards are loaded with a set amount of money and can be used to pay for meals or menu items at your restaurant. Customers buy these cards for themselves or as gifts for others. They are easy to use and can encourage people to come back to your restaurant. Gift cards are also a great way to attract new customers, especially during holidays or special events. 
• Comp Cards: Comp cards, provided for free by your restaurant to guests or employees, offer free meals, discounts, or specific menu items at no charge. While not sold, they’re a powerful tool for fostering strong customer relationships. They help fix service issues, exceed expectations, and boost loyalty, which encourage repeat visits. Comp cards can also serve as incentives for employees, improving morale and productivity. Additionally, they can be used in marketing campaigns to attract new customers by offering complimentary items. While comp cards deepen satisfaction and serve multiple functions, strict controls are essential to prevent misuse and manage financial impact effectively. 

Here's a table summarizing the key differences: 

3 Main Uses for Complimentary Gift Cards 

Gift cards give restaurants multiple ways to increase revenue and guest engagement. The key ways they can be used are as follows: 

1. Growing Loyalty Through Rewards 

Gift cards increase the likelihood of your restaurant creating loyal customers by providing a tangible reason for repeat visits. Many businesses tie gift card rewards and point redemption into their loyalty programs, where customers get a free meal or meaningful discount after making enough purchases. This strategy fosters recurring customer activity and repeat sales. 

2. Attracting New Customers and Keeping Them Longer 

When someone gives a gift card, they often simultaneously introduce new customers to your restaurant. This is because the gift card recipient often accompanies friends or family to a new place, increasing the number of diners. 

In addition, gift card customers usually spend more than the actual value of the gift card, increasing overall revenue in the restaurant. This is an excellent way to improve your clientele and achieve higher spending per head any time they visit. 

3. Special Promotions and Holiday Sales 

Gift cards are popular during the holiday season. As per our Restaurant Gift Card Sales Report, gift card sales surpassed $326 million in 2022, almost reaching pre-pandemic levels. Your restaurant can create unique gift card promotions that include elements like a free bonus card with the purchase of a gift card to help drive sales during peak periods. This will increase revenue during critical times of the year when people purchase gifts and plan large gatherings. 

2 Main Uses for Comp Cards 

While gift cards focus on revenue and profitable growth, comp cards have different purposes and benefits for restaurants: 

1. Employee Incentives and Internal Rewards

One of the most effective uses of comp cards is for employee incentives. Comp cards can be used as a reward for doing well, meeting or beating sales, or giving an excellent customer experience. Another significant use of comp cards is to make up for unavoidable customer service mishaps, like serving the wrong order, missing an ingredient, or otherwise accidentally providing the wrong experience.  

2. Customer Service Recovery

Comp cards are invaluable for rectifying unavoidable service mishaps, such as serving the wrong order, missing an ingredient, or providing an incorrect experience. They help maintain customer satisfaction and loyalty. 

3 Challenges When Implementing Comp Programs 

While comp cards offer advantages, they come with three challenges to address: 

1. Fraud and Abuse: Comp programs can be vulnerable to fraud and abuse, leading to financial loss. It's crucial to have strict controls in place to prevent these threats. 
2. Improper Financial Accounting: Inaccurate financial accounting of comp cards can result in an increased tax burden. Ensuring proper accounting practices is essential to avoid this challenge. 
3. Tracking and Management: Effective tracking and management of comp cards can be challenging. Without proper oversight, it's easy for comp cards to be misused or go unaccounted for, leading to potential financial and reputational loss. 

Gift Cards, the Common Offender 

Mismanaged gift cards can also lead to problems: 

• Unclaimed Balance: One major issue is the unclaimed balance. This occurs when customers don’t use the full amount on their gift cards, leaving businesses with unrealized revenue. To mitigate this, companies can implement targeted promotions to encourage customers to spend their gift cards. Sending reminders or offering special deals can help ensure that the gift card balances are utilized. 
• Dormant Accounts: Another concern is dormant accounts, which arise when gift cards go unused for an extended period. Different states have varying regulations regarding expired gift card balances. Some laws may require businesses to honor the remaining balance or provide store credit, even if the card has technically expired. To navigate this complexity, businesses should familiarize themselves with local regulations and consider offering grace periods or alternative solutions. This approach helps avoid legal complications and maintains positive customer relations. 

6 Points to Remember When Offering a Gift or Comp Card 

Here are six key details to make your gift and comp card efforts more successful when integrating them into your overall business strategy: 

• Go Mobile First: In today's digital world, adopting a mobile-first approach is essential. Ensure you digital gift cards are optimized for mobile devices, making it simple for customers to purchase, store, and redeem them directly from their smartphones. 
• Ease in Use: Keep your digital gift card user-friendly. The buying, receiving, and redemption process should be hassle-free and intuitive. Incorporate various features in your design that add value for customers, like mobile wallets for ease of use—for example, Apple Wallet and Google Pay. 
• Responsive Support: Ensure that there is good support for the issues regarding digital gift cards, such as troubleshooting documents, strong support for how to use your mobile app, and cross-device support documentation. 

• Usage Policy: Clearly state the terms and conditions of both your gift and comp cards. This would include the expiration date, redemption restrictions, and any ineligible items. This should be readily available to your customers on your website or at the back of the card itself. 
• Limitations: Inform customers about limitations or exclusions when purchasing, such as eligible menu items or blackout dates (i.e. periods when your cards are unavailable). This helps not only in managing customer expectations but also avoids disputes arising from misunderstanding or miscommunication. 

• Reflect Your Brand: Your gift and comp cards reflect your brand. In that light, make sure colors, logos, and other design elements are cohesive in maintaining brand identity and reinforcing the image of your restaurant. 
• High-quality Design: Make high-quality designs for physical and digital cards. A well-designed card will add more perceived value and give a positive impression of your restaurant. 

• Ensure Customer Information: To protect customer information and ensure secure transactions, implement Secure Socket Layer (SSL) encryption on your website. For example, when customers purchase digital gift cards, SSL encrypts the data exchanged between their devices and your server, safeguarding sensitive information like credit card numbers and personal details. 
• Avoid Fraud: Make sure the gift card software you use includes secure authentication methods and fraud detection tools to avoid theft and misuse of gift and comp cards. For physical cards, unique serial numbers or additional security features like two-Factor authentication, tamper-evident packaging, and encryption technology are effective in minimizing the risk of counterfeiting. 

• Performance Tracking: Periodically check on the success of your gift and comp card programs. Monitor redemption rates, customer feedback, and the financial impact of your sales and campaigns to understand effectiveness and determine room for improvement. 
• Update Offerings: Periodically review your gift and comp card products for refresh offers and relevancy. Add new designs, promotions, or features to ensure customer interest and engagement remains high. 

• Personalization Options: Allow various ways to personalize gift cards with personalized messages or designs. This makes it personal and unique for the one receiving it. 
• Ease of Redemption: Have an easy redemption process for card users, both physical and digital. Train your staff in handling card transactions so that this may go through as smoothly as possible and give clear instructions to customers during the process. 

These six core considerations allow you to proceed with gift and comp cards in the right way to boost customer satisfaction, accelerate sales, and foster brand loyalty. Ensuring mobile-first digital gift cards positions you to meet modern, tech-savvy consumer needs and provide them with a seamless experience within your program. 

5 Common Pitfalls and How to Avoid Them 

Here are some practical tips to help you get through the complexities of comp cards and avoid the gift cards common pitfalls:

1. Educate Staff:

• Comp Cards: Train the staff on handling and procedures for authorization and prevention of misuse. 
• Gift Cards: Train the staff to redeem the gift cards, prevent fraud, and respond to customer inquiries politely.

• Comp Cards: Periodic audits will help verify policy compliance and detect all discrepancies. 
• Gift Cards: Sale data, redemption patterns, and inventory levels must be reviewed to detect anomalies and establish potential issues.

• Gift Cards: Take customer feedback regarding the gift card experience to identify areas to be improved upon and address concerns. 
• Comp Cards: Obtain information from employees who receive comp cards on their effectiveness in creating motivation and satisfaction.

• Comp Cards: Know your local labor laws and regulations regarding rewarding and incentivizing your employees. 
• Gift Cards: Understand state and federal laws impacting gift card sales, unclaimed balances, and consumer protection.

5. Consider a Gift Card Management Solution:

Invest in specialized gift card management software for ease of operations, tracking of inventory, and avoidance of any kind of financial fraud. 

• Ease of Operations: Use software to streamline the issuing, tracking, and managing of gift cards. 
• Fraud Prevention: Strengthen security with tools that help detect and prevent financial fraud related to gift card transactions. 

Avoid these pitfalls, and your comp and gift card programs will run smoothly with minimal risk and maximum profitability. 

The Bottom Line 

Knowing the differences between comp cards and gift cards equips you to be successful with them. By implementing good policies, soundtracking systems, and proper accounting, you can realize the benefits and minimize the risks of both. Comp cards are frequently used as promotions and incentives for staff; their usage must be monitored for appropriate distribution and disposition.  

On the other hand, gift cards are an excellent way of ensuring customer retention and building revenue; hence, they need to be closely monitored to keep track of the balance on each card to avoid fraud. You can realize the full benefit of comp and gift cards in your restaurant by creating a complete set of rules and regulations concerning their use and utilizing the available technology to track and redeem them. 

Are you ready to unleash the power of comps and gift cards in your restaurant? Then, read our marketer’s guide to gift card strategy, and you'll find that they bring energy into your operations, driving your success.