Surely someone is going to loose money or not make any money as the company with gift cards ( like microsoft )would loose money selling it discounted to the shop (like Tesco), and there would be no point the shop selling it for no profit. How does this work ?
In: Economics
In addition to what’s already been stated, some stores (like Sam’s Club, for example) will sell a gift card for less than the dollar value on the card. So, for example, you can get a $50 gift card redeemable at Texas Roadhouse for $47.50.
In this case, Sam’s pocket’s a small percentage of the sale (let’s say 5% or about $2.37) and the rest goes to Texas Roadhouse.
It seems like Texas Roadhouse lost money, right? You get $50 worth of food and they only end up getting about $45.
But, keep in mind that just getting you in the door means they made money. I’m not exactly sure what their profit margin is on $50 worth of food, but let’s say it only cost them $30 between the cost of the actual items you purchased and the overhead costs of having you in the restaurant at that time. That means they profited $15. They might have profited $20 if you were going into the restaurant anyway, but if you weren’t that $15 is $15 they would have otherwise not made.
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