Restaurant Uses Custom Gift Card Coins for Gift Certificate Program

Cincinnati, OH – Bobby Mallozzi has seen a lot of changes in the way that restaurants administer gift certificates over the years.  So when he opened the Brown Derby Restaurant in Albany, New York last year, he applied all of that knowledge to devise a unique gift certificate program using custom coins.  Even though the cost of the coins is greater than the traditional plastic swipe cards he’s used in the past, Mallozzi is thrilled with the results – and the excitement that the custom coins have generated.

Not the Same Old Thing

The Brown Derby is an upscale, white table cloth restaurant in Albany, New York which is affiliated with the famous Hollywood icon bearing the same name.  So Mallozzi wanted a gift certificate that was as unique as the restaurant he was opening.  Plastic swipe cards were certainly a proven entity – but there were problems with this technology as well.  Nefarious individuals can (and do) clone the cards and circulate counterfeit gift cards.  Keeping track of the cards and their values (which may decrease over time) is another management headache that Mallozzi was hoping to avoid.  But one of the biggest reasons for the switch is the uniqueness of the new custom giftcard coins he’s had minted.

“The novelty of selling these is fantastic” says Mallozzi.  “Customers are amazed because they’ve never seen anything like it.  It makes a pretty impressive impression.”

He adds some “sizzle to the steak” so to speak by dressing up the gift coins so that they make a formidable gift.  The promotional coins are placed within a velvet lined gift box which is branded with The Brown Derby name and logo. These are then placed within a decorative gift bag.

Servers have started to show the decorative gift coin packages when presenting the check at the end of the meal.  This suggestive selling, along with an attractive display which customers can see upon entering the restaurant, is helping to promote the program to customers.

In keeping with industry standards, about half of the restaurants’ gift certificates are sold between Thanksgiving and Christmas.  So dressing up the package serves a dual purpose – it makes a more appealing presentation, and it simplifies the process for the gift giver since the package is all ready to go.  It will be interesting to see whether the uniqueness of the package can stimulate additional throughout-the-year sales for anniversaries, birthdays, thank-you gifts, and other special events.

Operational Considerations

Because the coins have a stated value, they are treated as cash – so all of the internal security measures that are used for cash also apply to the coins.  But because the coins are so unique, they are not likely to be duplicated by individuals of dubious character.  With no counterfeits floating around, there is less waste and fraud with the giftcard coins.

“These are exactly like cash” says Mallozzi.  “It is no different than monitoring your cash drawer reserves, the same security measures have to be in place.  It is almost easier than computer cards because there are so many ways to manipulate computers nowadays, and often it seems that workers know more about the internal aspects of the system than managers do.”

“We’ve had tremendous theft over the years when it comes to gift cards or rewards cards or entertainment books” continues Mallozzi, “we have not had any problems with the coins.”

Because there is no third-party card company involved, the giftcard coins hold their full value forever. “Customers hate the idea of a card losing a certain percentage every year,” says Mallozzi.  “While it was of some benefit to the restaurant if they lose value because you are keeping that money – but the majority of the money went to the card company.  It is nice to keep the third-party out of the equation.”

There is a financial hurdle to the coins, because they are more expensive than swipe cards.  “Our package with gift coins comes in at about $4.50” says Mallozzi.  That compares with about $1.75 for a swipe card with a paper holder.

But there is also the aspect of redemption rate to consider.  “There are a certain amount of people who will keeping the coins, and treating them as collectors items” recalls Mallozzi.  And since the gift coins are purchased at full face value, every one that finds itself as a collector’s item rather than redeemed nets The Brown Derby a tidy profit.

There is one change that they’ve made, though, in moving from year 1 to year 2.  “We changed the design of the coin to better determine when the coins were sold and when they are being redeemed.” And if the design change prompts a few more folks to collect them, well, then that’s not all bad either.

Overall Mallozzi is very pleased with the new gift coin program.  In addition to providing a unique presentation which has customers talking, the coins offer tangible savings because they reduce the theft and fraud that is common with swipe cards.  The higher initial cost is more than made up for when customers keep rather than spend the coins.  But perhaps the biggest reason is their uniqueness.  There are plenty of places to enjoy a fine meal in Albany, but there’s only one Brown Derby.  With his gift coin program Bobby Mollozi is underscoring the fact that The Brown Derby experience is truly unique – from the food, to the atmosphere, to wait staff, all they way to the gift coin program.