How gift cards can help small businesses amid the pandemic

A gift card for the restaurant Local Roots in Richfield, Minnesota. (FOX 9)

This holiday season, all restaurant owners want for Christmas is to stay in business.

In an effort to support local establishments, plenty of people are turning to gift cards, but there are some do’s and don’ts to keep in mind.

At Local Roots in Richfield, Minnesota, owner Courtney Norgaard points out the lunch rush is barely a rush at all. 

"We don’t know what tomorrow holds and that’s the reality for us every day," said Norgaard. "We are here today, but we could be gone next week."

Even when things were dialed up, Local Roots was never able to hit that 50 percent capacity. Now Norgaard is looking to shave costs any way she can -- even renting out pieces of the restaurant.

"The reality is right now we have 5,000 square feet we can’t use," she said.

She says she’s thankful for community support, including a slight increase in gift card purchases.

"There’s been a lot of talk of buy a gift card and then wait six months to use it," said Norgaard. "Consider it kind of a microloan, but I would say when you buy a gift card that’s yours to use how you see fit."

Stephanie March of Minneapolis-St. Paul Magazine agrees, pointing out when getting a gift card, using it quickly helps while the establishment has cash in-house. Waiting too long can complicate the owner's accounting and taxes. 

"They may not have as much cash flow going, so it’s harder for the restaurant to redeem that," said March. "They will because, again in Minnesota law, they have to, but it might be more of a hit."

March's other suggestions include:

  • Give smaller amount gift cards, $10 for example, in hopes the person on the receiving end will spend $20 or more when placing their order
  • Use cash to help businesses avoid credit card transactions fees
  • Buy e-gift cards to save the added 75-cent price of a custom plastic gift card
  • Give back the leftover amount on a gift card

"Let’s say you have a $25 gift card, but you only use $20 of it, instead of holding onto that $5, you can clip it and give it to the restaurant and they just realize that as a profit," said March.

As restaurants now take on completing their own deliveries to offering take-and-bake meals, Norgaard says every dollar spent is a gift to her business and she's stretching each cent as far as possible. 

"Our community has been wonderful that’s why we are here, that's why we are fighting every day," she said.