Expanding the Menu

Their immediacy is making restaurant gift cards a highly popular choice.

• By Jerry Laws
• Jan 01, 2006

Editor's note: The wide variety of today's safety incentives continues to amaze. Their growing popularity is less surprising. Recipients certainly appreciate restaurant gift cards when they are used as an incentive, says Cary Kuykendall, manager of gift card sales for O'Charley's (www.ocharleys.com) of Nashville, Tenn. The NASDAQ-traded company operates O'Charley's restaurants mainly in the Southeast and Midwest; a chain of Ninety Nine Restaurant & Pub locations in the Northeast; and also Stoney River Legendary Steaks restaurants in Georgia, Illinois, Kentucky, and Tennessee. Kuykendall discussed incentive strategy and implementation in an Oct. 20, 2005, conversation with Occupational Health & Safety's editor. Excerpts from the conversation follow.

We haven't focused on your kind of incentive before. I've been impressed by the variety of incentives that employers and employees take advantage of. Are people beginning to discover restaurant and food-related incentives?

Cary Kuykendall: Yes, very definitely so. As far as focused directly on the safety area, I think two things: Gift certificates and gift cards are becoming much more recognizable and are a much more sought-after type of award. The gift card breaks some of the stereotypical awards that safety programs use, which tend to be merchandise, and logo-ed products, and so forth.
That being said, I think restaurant certificates are beginning to be more acutely noticed now than they were at one time. The restaurant gift card adds a complementary touch to a program. It gives the program administrator another option to offer. They're very easy to administer.
Overall, entertainment-related gift cards--whether it be restaurants, or movie tickets, or theme parks, that type award--are really gaining in popularity. And, right now, restaurant certificates are quite popular, approaching 70 percent of all selections.

Really? I didn't know that.

Kuykendall: The gift card adds a new dimension to complete a program. By and large, gift cards, restaurant gift cards included, have very high perceived value. From the standpoint of an administrator presenting it to the recipients, that puts a real positive spin because of the high perceived value.

Can you tell how quickly recipients of these, if they are in safety incentive programs, use the cards?

Kuykendall: It's going to depend on the industry. . . . At O'Charley's, for example, we will see a fairly significant redemption within the first 30 to 45 days. By that I mean, probably 60 to 65 percent. There'll be an additional 10 or 15 percent over the next 30 days. Usually, by the end of a 90-day period, we're down to a high 90s as far as redemption is concerned, especially with restaurants because that's something that tends to be more immediate than apparel, or travel, or other merchandise awards.

Restaurant incentives are not typically used with holidays or at any particular time of year, are they?

Kuykendall: We do see a seasonal swing during the holidays. That is not necessarily incentive-based, although I do quite a bit of business-to-business gift card sales during the holidays. . . . Gift cards are a very popular holiday gift and are widely used as a bonus gift for the end of the year. So we do see a definite swing, in just the pure retail aspect of it. . . . We'll realize a high percentage of our annual sales in the last 10 weeks of the year.

Sometimes employers worry an incentive program will be very expensive at the outset or will get out of hand in terms of expense. Do people tend to think you have to buy an expensive card for it to be something you can give away?

Kuykendall: You really don't. Backing up a little bit on that question, a gift card seller will work with the client and really review: What are your program objectives? If you achieve your objectives 100 percent, what is going to be the cost to you?
Really, the person administering the program and the company need to know going in what the potential cost will be. I work with my clients to be sure they fully understand that, if the program achieves 100 percent, then here's what the total cost is going to be for awards--whether it be my restaurant gift cards or somebody else's shirts, mugs, caps, travel, or whatever.
Back to answer your direct question, with a casual dining restaurant like O'Charley's, your average bill is going to run between $12 and $13 per person. So, realistically, two people can go . . . and have a nice dinner for 25 bucks. With a lot of programs--especially if it's known that among the recipients a lot of families are involved--a $50 gift card award would be more reasonable.

A lot of employers are looking for a way to "send their safety program home" with the worker. That is, get the family involved.

Kuykendall: One of the major, positive things about restaurant gift cards is just what you've said: It's the ability for that recipient to share his or her accomplishments with his family or friends. With other incentives, it's more individual: "I got this great shirt" or "I won this beautiful briefcase." In most cases, you're not going to share your shirt or your briefcase with others.

Exactly. They might not even know you got it.

Kuykendall: But you can share a nice evening out: "Because I had so many safe work hours this month, I received this $100 gift card, so we're all going out to dinner and have a nice evening." It's that type of event that has a lot of staying power.
It also incents the family members to really encourage the participant on subsequent programs. "Hey, we really enjoyed that dinner. Have you got another program coming up?" "Well, yeah, we're starting one next month." "Well, let's really work safe during this program, too, so we can get another restaurant gift card." This type of award will involve the individual and his family and friends. It develops participation from all those involved.

Yes. That's exactly what I was thinking about.

Kuykendall: Very strong feature, especially to the restaurant gift cards, because that is something that can be shared very easily.

The thought is, that's really strong motivation.

Kuykendall: Absolutely. I've seen it produce positive results in many types of incentive programs.

Do people who buy your cards, use your program, incorporate them into a broader offering?

Kuykendall: Oh, yes. . . . If they leave it open--and if I were the administrator, I definitely would--I say, number one, who is your participating audience? Mostly male, mostly female? Give me some demographics. . . . What do these people enjoy? They enjoy hunting and fishing? OK, select a vendor who offers outdoor items. Maybe they're a big movie-going audience, so movie/theater tickets. Definitely, people eat, so restaurant gift cards are in there.

What I try to encourage them to do is really take a look at offering an attractive, diverse selection. It keeps the program fresh, it keeps the participants excited. And I think it really adds a lot of credibility to the program; there's a higher level of interest from the participants in the program to achieve the objectives. And it's much more well thought-out, well presented, and is perceived that way by the participants: "Hey, my company really cares about me because they're asking me to work safe or make more widgets, or whatever. And in so doing, I get to choose from these five categories of program awards."

The freshness you mentioned is really important. Everyone I've talked to over the years about this agrees you have to have something that's constantly reinforced and refreshed, so it doesn't get stale.

Kuykendall: Something I also try to emphasize when talking about a program is, if your budget permits and design of the program permits, yes, that person worked this month safely, but let's have some weekly rewards. If somebody does an exceptional job, go out to that assembly line and hand that person a gift card for 25 bucks. Tell him, "John, congratulations. You really did a good job this week. You really got your people motivated. You're a team leader. We want to give you this."
That immediacy is something that continually stimulates not only the recipient, but also the people around. They say, "I'm going to really work hard. I'm going to beat him and get next week's card. In the long run, all of us are going to be rewarded because we've all achieved our goals."

It's something impromptu that gets attention. Sounds like a super idea. You mentioned earlier helping clients administer their programs. How do you help them there?

Kuykendall: When I'm approached, I'll say to them, "Tell me what you want to do with your program." Let's stick to the safety. Maybe we want to increase production and work safety, too. Maybe that's the single objective, or two objectives. One thing I always ask them is, "How are you measuring the results?" Because it's very important in any type of program that you have definitive, measurable results.
Number one, management is going to ask for that. Before you sell a program and management releases the funds, you have to tell management, "We're going to increase production by 10 percent, and here's how we're going to measure it." Or "We're going to work more safely, and here's how we're going to record the safe hours worked."
It's also something that needs to be reported periodically throughout the campaign to the participants: "We've now achieved 85 percent of our goal," or "We've now worked so many safe hours," that type of thing. It's got to be measured. What I try to do is find out exactly, what do you want to do? What have you put in place? I very frequently make recommendations to them: Think about it this way, here's one way you can measure this, here's one way you can report it, here's one way you can make a presentation.

Presentation is very important. There needs to be a lot of hoopla and a lot of recognition. Presenting an award in front of your peers is an extremely impressive event for a rank-and-file workforce. It's significant to be recognized, to walk up there and get your award from your boss or from a senior member of management of the company in front of your shift of 100 people. Again, that is just one other thing that distinguishes you, along with the actual award itself.
I always try to encourage them. Management has got to buy into these programs. They've got to be involved. From a standpoint of not only approving the funding, but also participation. Management needs to get out on that line and say, "Hey, Jerry, I understand you got a card last week. Well, congratulations. I really hope you continue this so you get the big prize at the end." Make the worker feel like management is very interested, very behind the program and part of it.

I've talked with people who really see the importance of involving workers in the design and administration of the program, too.

Kuykendall: No question. Those are the people who are on the front line every day and know what the challenges are. Very definitely, there need to be representatives of the actual workforce on the committee when they go to design their program. It's been my experience that they have tremendous input and the ability to say, "Here's what really works. Here's a way that you can measure it."

They would know what's achievable, and they might say what you think you want to accomplish is not enough: "We could go farther than that, and here's how to structure rewards to accomplish it." You mentioned the high popularity of restaurant gift cards; do you think incentives as a whole are more popular and spending on them is rising?

Kuykendall: There are some industries where incentives continue to rise. . . . . Employee recognition, which could involve a safety program, is becoming quite significant. In fact, in some recent surveys, as much as 72 percent of an incentive program was geared toward performance recognition and boosting morale, which is pretty high.
It used to be increasing sales. Those are still important, but they're not nearly as important today as what I term people-focused incentives, as opposed to performance-focused incentives.

That is very impressive.

Kuykendall: As we continue to go through some downsizing, some economic trending, a reliable, consistent, dependable sales or work force is very important to a company. The ones that are involved are really focusing on that and gearing their incentive program toward that worker-centric type of program.

Right. We hear so much that workers soon will be scarce in many industries.

Kuykendall: To answer your other question, from a spending standpoint, overall it's somewhat flat. But I read a report recently where approximately 50 percent said they were going to spend the same thing they spent last year; another 30 to 35 percent said they were going to increase it some; the remaining 15 percent said they were going to decrease it. So a good 85 percent . . . said either we're going to maintain our budget toward incentives or we're going to increase it. So I think that's pretty positive.

The economy has been fairly strong. I assume this is based on broad economic trends?

Kukyendall: It definitely is tied to that, no question about it. I think more companies are beginning to recognize the importance of that worker.

It seems to me you're in a very good niche. Americans as a whole eat out a lot; we're a very food-oriented culture.

Kuykendall: Absolutely. . . . With our pricing structure and variety of food offerings, we are an attractive choice for a diverse workforce . . . the type of restaurant that makes both the worker and management feel comfortable and welcome. We attract a fairly broad base from the workforce.

This article appeared in the January 2006 issue of Occupational Health & Safety.

This article originally appeared in the January 2006 issue of Occupational Health & Safety.