(Part of being on break means I can write totally inane, off-topic posts…)
We get takeout from Leeann Chin once per week, usually on Fridays. This is about the third Christmas season now (that I can remember) where they offer a gift card deal: buy a $40 gift card and receive an additional $10 “free” in gift cards.
So let’s do the math:
Our usual bill: $13.81. (Includes Bourbon and Mongolian Chicken, umm…)
$13.81 x 52 = $718.12 per year
If I was willing to pay for a year’s worth of meals in advance:
$718 / $50 = 14.3624 gift card deals. (Let’s round down to 14.)
14 cards x $40 = $560 actual outlay
$560 gets us $700 worth of meals. That’s a $140 return on a $560 investment, for a very crude and approximate 25% annual return. With the risks being mainly that Leeann Chin might go under or that service or quality might fall below acceptable levels. I’m discounting inflation risk based on past price stability.
(I was surprised to learn that there are only about 20 restaurants here in Minnesota, with the company based in Bloomington. I thought they were bigger than that. But they’ve been a going concern for some time now, so I’m not that worried about insolvency.)
But! there’s a catch. The $10 “freebie” cards are only good through 31 January 2008.
The first Friday of the promotion this year was November 16, which would have allowed for 10 Fridays following that one on which to spend the early expiring cards. We’d only want:
$13.81 x 10 cards = $138.10 worth of short fuse cards (let’s say we order an egg roll one week to avoid letting the $1.90 go to waste).
That means we’d need to invest $400 on November 16 for the maximum return on investment, which I figure is about 17%. That’s a $100 return on a $400 investment after 36 weeks. ($500 / $13.81 = 36.2)
Note that for planning purposes, we shouldn’t figure in extra consumption (except for that egg roll), as that would diminish our return.
For real, I don’t think I want $500 of Leeann Chin gift cards on hand, preferring instead a little more liquidity and a little less commitment.
One Comment
Interesting. I suppose the same could apply to other discount situations. (Most bookstores now seem to participate in a single frequent-buyer reward program, with an annual $20 fee that nets you a) don’t pay the tax and b) an extra 10% off items on sale; it’s easy to calculate that 20 paperbacks a year is enough to recoup the fee, and a single $29.95 hardcover on sale at 30% off you get at 40% off for a savings of roughly $3, which can add up to $20 even faster. Not strictly speaking gift cards, but the economics are somewhat similar, with an up-front fee and then a ticking clock. The lower fee and longer deadline make it much more attractive of course.)
On the other hand, the only Leeann I’m particularly intrigued by is Leeann Tweeden. :)
14 December 2007 at 9:31 pm