Business Beat August 2020 - The Multiplier Effect

What if I gave you a $50 gift card to your favorite restaurant? You could go for lunch by yourself and try to stuff two meals into your belly, but it’s more likely that you’d invite a couple friends for dinner and wine, and run up a bill of $150. The restaurant just multiplied a $50 gift card by 3x, much of which will be spent in the community buying cleaning supplies, local beer and paying for staffing. The restaurant staff will go and spend their tips as well. That $150 in revenue generated from a $50 gift card, and the money the restaurant ownership and staff spend as a result, is called the multiplier effect.