As non-fungible tokens step up to the table with a score of benefits for brand loyalty, large restaurant chains are already starting to dish them out to customers. For example, Burger King released its Keep It Real Meals digital tokens earlier this year, unveiling different NFT collectibles to align with its new line of celebrity meal packages. Late last year, Dave & Buster’s launched its NFT Digital Collectibles Prize program to offer a unique gamified, immersive experience for loyal NFT collectors.
The restaurant industry, trailing only a few steps behind the mega investments of mainstream consumer brands, is being eyed up as the next frontier for NFTs. But the efforts of independent restaurants will probably look different than the frontrunner attempts we’ve seen from the giant chains, as they double down on exclusivity, loyalty and revenue potential.
For example, entrepreneur Gary Vaynerchuk recently announced he will open the world’s first NFT restaurant, Flyfish Club, later this year in New York City. As a members-only dining experience, NFTs membership and additional benefits will be available for purchase by customers and investors on the blockchain. Perhaps the most significant development is the fact that Vaynerchuk’s VCR Group launched a tremendously successful fundraising platform, generating more than $ 14 million on the initial mint of Flyfish Club’s NFT membership. Sales eventually reached a striking $ 21 million.
The following are considerations and recommendations for restaurants as they consider how NFTs may help their business thrive in the upcoming post-pandemic era.
NFTs differ from cryptocurrency in an important way: exclusivity
Although NFTs are still in their infancy, they can be thought of as standard, physical artwork (or other collectible item) when you want to assess their value. On the flipside, cryptocurrency and stocks are fungible – so each unit is the same. This is an important distinction, especially in the world of food and beverage where exclusivity sells.
Effectively, the same factors that make art and collectible items valuable will also bolster an NFT, including novelty, rarity, historical significance, prestige, provenance, etc. These features of exclusivity all come into play with NFTs, which is why they are likely to have a greater impact on restaurants than cryptocurrency coins.
There are also some unique value propositions embedded in NFTs not found in traditional media of art that can help restaurants fire up customer loyalty and generate revenue. As the full name “non-fungible token” indicates, every NFT serves as a one-of-a-kind digital asset. The NFT is stored on a blockchain, a public-facing digital ledger that makes it possible to prove who owns the asset now and at any time in time.
Potential use cases for NFTs in the restaurant industry
It is important to note an NFT is more than just a deed of ownership. Because of the digital capabilities, an NFT’s value can continue to be enhanced over time. For instance, an NFT may serve as a membership pass, a discount coupon, a sneak peek to view new offerings, etc. These are just a few simple examples and there is a range of use cases already at the fingertips of restaurants.
Firstly, the success of FlyFish affirms the success of leveraging NFTs as a means for pre-opening fundraising, as well as the tokenization of membership. But once a restaurant tokenizes its membership structure, it gains access to nearly endless possibilities for customer engagement. Members can be offered exclusive admission to special events, including menu tastings in-person or access to a virtual lounge or a metaverse hangout. A good example is Chipotle, which recently launched Burrito Builder on the digital gaming platform Roblox. In this virtual world, players can roll and build burritos to earn Burrito Bucks.
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NFTs also have the potential to change how a restaurant handles transactions. Presently, when a customer patronizes a restaurant, the transaction is generated on the restaurant’s point of sale system (POS). It will then statically reside inside the POS. By moving to an NFT system, the transaction will become part of the blockchain. Subsequently, the transaction can be integrated to the customer’s digital wallet – enabling an automated, seamless loyalty system powered directly by a customer’s activity.
The overhaul of transactions may render the current POS model obsolete. In today’s business landscape where cybersecurity threats are a looming threat, blockchains are widely regarded as secure. Due to cryptography and centralization, the blockchain is inherently tough to tamper with. NFTs, as a result, are virtually impossible to replicate.
NFT transactions can be attached to a customer’s identity or made to be anonymous. For restaurants, the identifiable data is the linchpin for customer loyalty. On the other side of the token, the anonymous data can become a particularly valuable asset in the external marketplace.
Understanding the NFT marketplace
To get started, restaurants need to determine how they will mint, host and transact their NFTs. Generally, there are three options for marketplaces: streamlined, augmented and proprietary.
Streamlined marketplaces are most akin to traditional online marketplaces, such as eBay and Mercari, and focus on enabling fast, efficient transactions. For this reason, streamlined marketplaces, like OpenSea, have the largest audiences. But, they also have the most competition as well.
Augmented marketplaces, on the other hand, are more niche and offer creators specialized services such as minting (creation), curation, pricing strategy, advisory and data analytics on their NFT portfolio.
Proprietary marketplace platforms take it a step further for creators, as they’re built from scratch by the brands or creators themselves. Focused exclusively on their own proprietary digital assets, this option allows for restaurants to own the user experience from the start – and continuously customize it as they see fit.
First step: how do restaurants get started?
The top decision restaurants must grapple with is what type of NFT platform will work best for them in minting their NFTs and developing a program.
For long term success, it is probably best to look at using an augmented platform or, better yet, creating a proprietary platform that will empower you to own, control and continuously build out your restaurant’s NFT presence. After all, the NFT space – especially its application in the restaurant industry – is nascent and still evolving. Having your own platforms equips you with the most malleability and agility in keeping pace with the latest industry and consumer trends.
While the idea of creating your own marketplace may seem daunting at first, the competitive advantage is far too powerful to ignore. When someone else owns the marketplace, your user base will be diluted by the activities of other adjacent or competitor brands. In an era where attention spans are thin and brand loyalty fades quickly, transacting your NFTs on an open marketplace is probably not the best choice for a restaurant.
Next steps: white labeling may be the preferred route for restaurants
The process of building out a proprietary marketplace is increasingly being fast-tracked and simplified. That’s because, rather than hiring staff internally to develop and build out an NFT marketplace end-to-end, many brands and creators are going the route of engaging white label partners. As most restaurants do not have a dedicated NFT specialist on staff, this is likely to become the preferred track for restaurants entering the NFT business.
By engaging a qualified white label partner, restaurants can balance customization with nimble, turnkey development. First and foremost, the white label model helps restaurants circumvent the complexities and cost restraints usually incurred when setting up a marketplace from scratch. Importantly, this model also avoids the pitfalls of experimentation, allowing restaurants to instead invest in tried-and-true technology. At the end of the day, white labeling offers an expert-built turnkey solution that can be branded and customized as needed.
When the right white label partner is put on the job, a restaurant’s proprietary platform can be operational within 30 days. Once the platform’s first NFT is minted, it is free and easy to create more NFTs, build a program and generate revenue on the marketplace. The primary investment needed is the time for due diligence, determining what features are needed and how you can customize the platform for your brand. After that, 30 days is a relatively short time to create sustainable, Web.30 user experiences for your restaurant that will pay off in a multitude of ways.
Jonathan Teplitsky, CEO of Pipeline Marketing and Director of Community Growth for Horizen Labs, has over a decade of marketing experience working at companies like Amazon.com, Uber and Accenture and founding several retail startups in technology and travel. He brings an understanding of how blockchains and digital currencies have the potential to transform people’s lives without access to traditional banking systems. Earning an MBA from Harvard Business School and a BS in Finance and Management from New York University, Jonathan is a former Army officer and has led humanitarian assistance missions in Djibouti, Uganda and Tanzania.