Why You Should Start Buying Restaurant Gift Cards At Costco For Big Money Savings

Costco is known for selling the eclectic right alongside the utterly practical. Shoppers can purchase everything from a four-person steam sauna to a funeral casket to a 72 pound wheel of cheese — not to mention that 48-roll pack of bath tissue. Plus, shoppers can even bring home dinner in the form of Costco's famously cheap rotisserie chicken. However, one Costco bargain that members might be overlooking is the opportunity to purchase restaurant gift cards at a discount. For example, being able to buy a $100 gift card to your favorite restaurant for just $79.99. Although the availability of specific restaurants is subject to change, some good deals can include gift cards from national brands like Domino's Pizza, IHOP, Morton's Steakhouse, and TGI Fridays — all at a discount of at least 20%.

Some of these restaurant gift cards are available in multiples of smaller increments. For example, four $25 gift cards to Papa Johns for $79.99. Although Costco members can certainly use all of the gift cards for themselves, the smaller increments can come in handy as gifts. Plus, restaurant gift cards can also serve as a nice "thank you" for professions where cash tips aren't appropriate, like doctors or flight attendants. 

The mechanics of how Costco is able to sell restaurant gift cards at a discount, and yet still make a profit, has never been publicly disclosed. There's always Costco's good old fashioned bulk buying power — which the company might use to drive down the acquisition costs of gift cards from its vendors in exchange for a large volume purchase. Similarly, the warehouse club might pay a chain restaurant $75 for a $100 face value gift card, which it later sells to customers for $80. In that scenario, the restaurant is only receiving $75 for $100 worth of food and drinks. While that might seem counterintuitive, there are many reasons why a restaurant chain might agree to such a deal.

First of all, some customers will spend in excess of the value of the gift card on splurges or add-ons that are especially profitable for the restaurant — like alcoholic beverages and desserts. As well, some or even all of the gift card balance might end up going unused. According to a 2024 survey conducted by Bankrate, 43% of Americans reported having at least one unused gift card. The amount of money being left on the table — or in a drawer, more likely — averages out to $244 per person in unspent gift cards, gift vouchers, and store credits. Restaurants know that many of these gift cards end up being underutilized, or not claimed all, which amounts to pure profit for the business.

Of course, the one caveat to scoring these cheap restaurant gift cards is that buyers will likely need to have a Costco membership. Although some legitimate hacks exist to shop at Costco without a membership, the retailer is cracking down on non-members trying to sneak in without a valid membership card. Note that a standard Costco membership, called a "Gold Star Membership," costs $65 per year. 

That said, once you're a member of the warehouse club, there's nothing else necessary to take advantage of its cheap gift cards — meaning you don't need to join any loyalty programs or sign up for marketing emails in order to take advantage of Costco's offerings. However, extreme savers can definitely leverage their Costco-sourced gift cards with other promotions like happy hour in order to double-dip on savings at their favorite eatery. Note that both the selection and pricing of Costco's restaurant gift cards can vary between your local store and Costco's online offerings, so it's wise to search both locations periodically for the best deals.