Starbucks gift cards dominate the holidays

1 in 5 Americans will receive a Starbucks gift card this holiday season. Starbucks projects it will sell $60 million in gift cards on December 24th alone. Gift cards are growing in popularity, and sales are a key driver of revenue for retailers. Starbucks gift cards are a holiday favorite, making them ideal stocking stuffers or thank-you gifts for teachers and neighbors alike - and they quietly bring in hundreds of millions of dollars in revenue for the company, one $5 increment at a time. The coffee giant is a top-selling brand for gift cards in the US, and #1 among quick-service restaurant and fast food brands. Starbucks says one in every five Americans will receive one of its gift cards this holiday season , up from one in seven in 2015. December 24th, Christmas Eve, is projected to be its busiest day of the year for gift card sales across the US and Canada, with Starbucks estimating consumers will load more than $60 million onto new Starbucks cards in a single day. "A Starbucks Card is more than a gift - it's an invitation to pause, connect, and share a moment with someone you care about or treat yourself to something you love," Tressie Lieberman, Starbucks' global chief brand officer, told Business Insider. "We're proud to be a beloved brand and honored that Starbucks Cards remain a go-to gift during the holiday season." Gift cards are big business in the retail sector. A recent report from the National Retail Federation found that gift cards are the second most popular gift this season, with 43% of shoppers planning to purchase at least one gift card. Total spending on gift cards is projected to reach $29 billion this year. For brands like Starbucks, Amazon, Target, and other top sellers, that means a big payday wrapped in a small package. According to Starbucks' most recent financial filings, the company held $1.8 billion in unredeemed gift card funds as of September 28, up from $1.7 billion at the same time last year. In comparison, Target held $1.2 billion as of February, while Amazon held $5.4 billion as of December 31, 2024. A gift that keeps on giving Gift cards are especially valuable to companies because they collect lump sums of cash upfront, often months before delivering a product - and in some cases, without having to deliver one at all. Based on historical spending patterns, companies can project that a portion of gift card balances will never be redeemed, allowing them to recognize that unused money as revenue, a process known as "breakage." In its most recent fiscal year, Starbucks recognized roughly $200 million in breakage revenue from company-operated stores and $22 million from its licensed locations, according to its annual filing. Neither Target nor Amazon makes their breakage rates explicit in their filings; instead, they roll estimated breakage into reported gift card issuance figures, making it difficult to directly compare with companies like Starbucks, which separately disclose breakage revenue. However, more often,...

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