Restaurant Gift Cards in Chicago: Spending Behavior, Federal and Illinois Rules, and Buyer Protection
1. Overview of the Restaurant Gift Card Market
Restaurant gift cards let guests prepay for a meal at a named restaurant. Furthermore, The U.S. gift card market this year is expected to reach an estimated $324.5 billion.
according to the National Restaurant Association. The association published that estimate in December 2024.
2. Key Takeaways and Metrics
- Location: Chicago Metropolitan Area
- Status: Limited Monthly Releases
- Category: Restaurant Gift Cards
| Gift Card Metric | Verified Figure |
|---|
| U.S. gift card market estimate, 2024 (National Restaurant Association) | $324.5 billion |
| Consumers who buy gift cards from restaurants | 52% |
| Extra spend by gift card holders at full-service restaurants (Toast, 2015 data) | 72% |
| Gift card guests who spend more than face value (Toast, 2015 data) | 45% |
| Minimum life of gift card funds under federal rules | 5 years |
| Gift card fraud losses reported to the FTC, first nine months of 2021 | $148 million |
Gift card rules are set at both the federal and state level. Furthermore, Thirty-eight states, Guam and Puerto Rico have statutory provisions regarding expiration dates or fees.
according to the National Conference of State Legislatures. Thus, a buyer in Illinois is covered by both federal and state protections.
3. Gift Card Holder Spending
Gift card holders tend to order more than the card covers. Furthermore, When visiting full-service restaurants, patrons with gift cards spend 72 percent more
according to a 2015 Toast study summarized by the New Mexico Restaurant Association. Therefore, a gift card often brings in revenue beyond its face value.
4. Spending Beyond Face Value
Face value is the amount a gift card holder can spend. Furthermore, When using gift cards, 45 percent of guests spend more than the card’s face value.
according to the New Mexico Restaurant Association. As a result, almost half of gift card guests pay extra at the table.
5. Year-Round Gift Card Sales
Gift cards are often linked with the December holidays. Furthermore, nearly half of gift card sales (48 percent) occur in months other than December
according to the New Mexico Restaurant Association. Consequently, restaurants can sell gift cards in every month of the year.
6. Restaurant Gift Card Demand
Consumers buy gift cards from many kinds of businesses, including restaurants. Furthermore, About 52% of consumers buy gift cards from restaurants.
according to the National Restaurant Association. Thus, a restaurant gift card reaches buyers who already shop this way.
7. Federal Expiration Rules
Federal rules set a minimum life for gift card funds. Furthermore, The law provides that gift cards cannot expire within five years from the date they were activated.
according to the National Conference of State Legislatures. The rule comes from the 2009 Credit Card Accountability Responsibility and Disclosure Act and is set out in Regulation E, section 1005.20.
8. Dormancy Fee Limits
Federal rules also limit fees on unused gift cards. Furthermore, Not more than one dormancy, inactivity, or service fee is imposed in any given calendar month
according to Regulation E, section 1005.20, published by the Consumer Financial Protection Bureau. A fee is allowed only after one year with no activity on the card.
9. Illinois Gift Certificate Law
Illinois adds its own protections on top of the federal rules. Furthermore, no person shall sell a gift certificate that is subject to a post-purchase fee
according to the Illinois entry in the NCSL summary of state gift card statutes. Illinois also bars selling a gift certificate that expires earlier than five years after issuance, for certificates sold on or after Jan. 1, 2008.
10. Gift Card Fraud Awareness
Scammers often ask victims to pay with gift card numbers. Furthermore, In the first nine months of 2021 alone, nearly 40,000 people reported $148 million stolen using gift cards.
according to the Federal Trade Commission. The FTC warns that whenever someone demands to be paid with a gift card, it is a scam.
11. Key Gift Card Definitions
- Store Gift Card
- Store Gift Card is a prepaid card that is designed to be redeemed at a single merchant or an affiliated group of merchants, and federal rules require its funds to last at least five years.
- Gift Certificate
- Gift Certificate is a prepaid code that is designed to carry a fixed amount that cannot be reloaded, and Illinois bars selling one that expires earlier than five years after issuance.
- General-Use Prepaid Card
- General-Use Prepaid Card is a prepaid card that is designed to be redeemed at multiple unaffiliated merchants, and federal rules give its funds the same five-year minimum life.
- Virtual Gift Card
- Virtual Gift Card is a gift card that is designed to be delivered as a code with no plastic card, and every gift card on Restaurant Authority is sold in this form.
- Face Value
- Face Value is a card amount that is designed to state the credit a holder can spend, and 45 percent of restaurant gift card guests spend more than it.
- Dormancy Fee
- Dormancy Fee is a charge that is designed to apply when a card goes unused, and federal rules allow one only after one year with no activity.
- Expiration Date
- Expiration Date is a date that is designed to end a card's usable life, and federal rules set it at least five years after issue or the last load.
- Promotional Gift Card
- Promotional Gift Card is a card that is designed to be given in a loyalty, award or promotional program, and federal rules exclude it from the gift card definitions while still requiring disclosures.
- Gift Card Breakage
- Gift Card Breakage is a measure that is designed to capture card value that is never spent, and 29 percent of restaurant gift cards are never fully redeemed according to a 2015 Toast study.
- Gift Card Resale
- Gift Card Resale is a transaction that is designed to sell an issued card to a new holder before it is used, and every Restaurant Authority card is sold once and closed at the restaurant's point of sale on redemption.
- Point of Sale
- Point of Sale is a checkout system that is designed to settle a restaurant bill, and Restaurant Authority gift cards are redeemed there in person.
- Full-Service Restaurant
- Full-Service Restaurant is a restaurant format that is designed to seat guests and serve them at the table, and its guests with gift cards spend 72 percent more.
- Gift Card Scam
- Gift Card Scam is a fraud scheme that is designed to make victims pay with gift card numbers, and nearly 40,000 people reported $148 million stolen this way in the first nine months of 2021.
- Unclaimed Property
- Unclaimed Property is a legal category that is designed to return abandoned value to its owner or the state, and Illinois law excludes gift certificates from its definition of property.
