Card Cos. Dish Up Dining Perks
Corporate card providers are bringing the concept of preferred vendors to the dinner table. Diners Club and MasterCard International recently have partnered with restaurant marketing firms, promising corporations up to 30 percent off dining bills when cardholders eat at preferred restaurants.
Diners Club this summer partnered with iDine Networks, a restaurant savings program, to launch a discount program that could save companies as much as 15 percent on dining bills, including tax and tip, when travelers use their Diners card to eat at the approximately 4,000 restaurants that accept Diners. Meanwhile, MasterCard last month signed an alliance with iSeatz, a program similar to iDine, through which registered cardholders can slash as much as 30 percent off of bills at more than 1,000 restaurants in 34 cities in the United States, as well as Canada, Mexico and Europe.
MasterCard's partnership with iSeatz, an online restaurant reservation network and savings program, is extended both to consumer and corporate cardholders. While the program is administered on a card-by-card basis—largely addressing the needs of individuals over companies—the payment network is considering adopting a similar program specifically for centrally managed corporate card programs.
As air and hotel always have comprised the lion's share of the travel budget, dining and entertainment—as a general rule of thumb—make up about 4 percent to 8 percent of a company's travel spend. Travel managers have used negotiations to slash costs on air and hotel, but now vendors are playing the role of negotiator by cutting dining expenses when travelers take their cards to "preferred vendors."
Kelly Belanger, director of marketing for Diners Club, said that due to the shear number of restaurants and decentralized management structures, it would be impossible for a corporation to negotiate with restaurants in the same fashion as it does with air, car and hotel vendors. She said that just by registering their cards in the program, participating companies will receive a rebate check of up to 15 percent on dining on a quarterly basis.
"These types of programs have actually been in place a long time and they've gone by a number of different names," said Carol Salcito, president of Norwalk, Conn.-based consultancy Management Alternatives. "Then about two years ago it petered off a little bit, but now people are realizing they work pretty well. Plus, because the card companies are so very competitive, that's been one of the pieces that has been resurrected. It really works very, very well."
However, such programs in the past required vouchers or a special card, which hindered corporate diners from discreetly paying for meals with clients. Now that the programs automatically are ingrained into corporate payment systems, the discretion issue has been resolved.
"With the new Restaurant Savings Program, there are no coupons involved," said Brenda Gaines, president of Diners Club North America. "Cardmembers simply pay with their corporate card at a participating restaurant and the benefit is rebated to their employers."
Proponents have touted such programs as a win-win proposition for all parties. As companies get a percentage off dining spend, restaurants participating in the program benefit from "incremental customer traffic that fills tables," according to iDine Networks. Meanwhile, the program encourages volume to be driven to the charge card vendors. IDine even has built in an incentive for travelers. As companies get fed the rebate, cardholders can earn airline miles when they use their corporate cards at restaurants in the program.
Among those companies that have brought iDine into their corporate travel operations is New York-based pharmaceutical giant Pfizer. "Right now we have it interfaced with all of our U.S.-based corporate cards," said Phil Dunphy, senior manager of global travel. "There is a benefit: It's newfound money." Dunphy said that in the nearly nine months that the program has been rolled out, the company has achieved significant savings tipping six figures. To encourage corporate employees to use the program when dining out, Pfizer has set up a link to iDine's participating restaurants page through the intranet—so that corporate diners easily can search for participating restaurants by region.
An American Express spokesperson said that while the T&E card giant has explored the possibility of instituting a similar dining program, it has yet to do so. Meanwhile, Visa offers Visa Dining Privileges for its Signature and Infinite cards, which are consumer offerings. The program has more than 1,000 restaurants in 60 metropolitan areas and offers online reservation services as well as discount rates and special offers.
However, iDine—which has contracts with more than 10,300 restaurants in 75 markets—offers its program through any card network, including American Express, Visa and MasterCard.
"At most companies, typically the travel manager or purchasing manager signs an agreement and registers all the cards upfront," said Nancy Hoffman, director of business development at iDine. "There is no upfront fee for companies to adopt the program and once implemented companies can save up to 15 percent on all restaurant bills at registered restaurants." Once cards are registered, iDine's technology tracks the use of registered cards at participating restaurants. The company then receives the rebates in a lump sum.
"In terms of the transaction the traveler dines in one of the 10,000 participating restaurants, uses the card the way they normally do, then the rebate goes directly back to the corporation and the traveler is awarded the miles. It's seamless," Hoffman said, adding that last year iDine rebated millions of dollars back to companies enrolled in the program.