As non-fungible tokens hit the table with a score of brand loyalty benefits, major restaurant chains are already beginning to distribute them to customers. For example, Burger King has released its Keep It Real Meals digital tokens earlier this year, unveiling different NFT collectibles to align with its new line of celebrity dining packages. End of last yearDave & Buster’s has launched its NFT Digital Collectibles prize program to offer a unique gamified and immersive experience to loyal NFT collectors.
The restaurant industry, which is only a few steps away from the mega-investments of major consumer brands, is seen as the next frontier for NFTs. But the efforts made by independent restaurants are likely to be different from the high-profile attempts we’ve seen from giant chains, as they double down on exclusivity, loyalty and earning potential.
For example, entrepreneur Gary Vaynerchuk recently announced that he would open the world’s first NFT restaurant, Fly fishing club, later this year in New York. As a members-only dining experience, membership NFTs and additional benefits will be available for purchase by customers and investors on the blockchain. Perhaps the most significant development is that Vaynerchuk’s VCR Group has launched a hugely successful fundraising platform, generating more than $14 million on the first mint of Flyfish Club NFT membership. Sales finally peaked $21 million.
Here are considerations and recommendations for restaurants as they consider how NFTs can help their business thrive in the coming post-pandemic era.
NFTs differ from cryptocurrency in one important way: exclusivity
Although NFTs are still in their infancy, they can be considered a standard physical piece of art (or other collectible) when you want to gauge their value. On the other hand, cryptocurrency and stocks are fungible – so every unit is the same. This is an important distinction, especially in the food and beverage world where exclusivity sells.
Indeed, the same factors that make art and collectibles valuable will also strengthen an NFT, including novelty, rarity, historical significance, prestige, provenance, etc. These exclusivity features 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 unique value propositions built into NFTs not found in traditional art media that can help restaurants retain customers and generate revenue. As its full name “non-fungible token” suggests, each NFT serves as a one-of-a-kind digital asset. The NFT is stored on a blockchain, a publicly available digital ledger that helps prove who owns the asset now and at any time.
Potential use cases for NFTs in the restaurant industry
It is important to note that an NFT is more than just a deed of ownership. Due to digital capabilities, the value of an NFT can continue to improve over time. For example, an NFT can serve as a membership card, discount coupon, preview to see new offers, etc. These are just a few simple examples and there is already a range of use cases at the fingertips of restaurants.
First, the success of FlyFish confirms the success of exploiting NFTs as a means of pre-opening fundraising, as well as tokenizing membership. But once a restaurant has symbolized its membership structure, it has access to nearly endless possibilities for customer engagement. Members may be offered exclusive entry to special events, including in-person menu tastings or access to a virtual lounge or metaverse hangout. A good example is Chipotle, which recently launched Burrito Builder on the Roblox digital gaming platform. 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 the way a restaurant handles transactions. Currently, when a customer visits a restaurant, the transaction is generated on the restaurant’s point-of-sale (POS) system. It will then reside statically inside the POS. By switching to an NFT system, the transaction will become part of the blockchain. Subsequently, the transaction can be integrated into the customer’s digital wallet, enabling an automated and transparent loyalty system powered directly by a customer’s activity.
Redesigning transactions may render the current POS model obsolete. In today’s business landscape where cybersecurity threats are an imminent threat, blockchains are widely considered secure. Due to cryptography and centralization, the blockchain is inherently difficult to tamper with. NFTs, therefore, are virtually impossible to replicate.
NFT transactions can be tied to a customer’s identity or made anonymous. For restaurants, identifiable data is the keystone of customer loyalty. On the other side of the token, anonymous data can become a particularly valuable asset in the external market.
Understanding the NFT market
To get started, restaurants need to determine how they will mint, host, and process their NFTs. Generally, there are three options for marketplaces: streamlined, augmented, and proprietary.
Simplified marketplaces are most similar to traditional online marketplaces, such as eBay and Mercari, and aim to enable fast and efficient transactions. For this reason, streamlined marketplaces, like OpenSea, have the largest audiences. But, they also have the most competition.
Augmented marketplaces, on the other hand, are more niche and offer creators specialized services such as creation, curation, pricing strategy, consulting and data analysis on their NFT portfolio.
Proprietary marketplace platforms go one step further for creators, as they are built from the ground up by the brands or creators themselves. Focused exclusively on their own proprietary digital assets, this option allows restaurants to own the user experience from the start and continuously customize it as they see fit.
Step One: How Do Restaurants Get Started?
The main decision that restaurants have to make is what type of NFT platform will be best for them to create their NFTs and develop a program.
For long-term success, it’s probably best to use an augmented platform, or better yet, create a proprietary platform that will allow you to own, control, and continually grow your restaurant’s NFT presence. . After all, the NFT space – especially its application in the restaurant industry – is nascent and continues to evolve. Having your own platforms gives you the greatest malleability and agility to keep pace with the latest industry and consumer trends.
Although the idea of creating your own market may seem daunting at first, the competitive advantage is far too powerful to ignore. When someone else owns the market, your user base will be diluted by the activities of other adjacent or competing brands. In an age where attention spans are thin and brand loyalty is rapidly fading, trading your NFTs in an open market is probably not the best bet for a restaurant.
Next steps: white labeling could be the preferred path for restaurants
The process of creating a proprietary market is increasingly accelerated and simplified. Indeed, rather than hiring in-house staff to develop and build an end-to-end NFT marketplace, many brands and creators are opting for white label partners. As most restaurants do not have a dedicated NFT specialist on staff, this will likely become the preferred lead for restaurants entering the NFT sector.
By engaging a qualified white label partner, restaurants can balance customization with agile, turnkey development. Above all, the white label model helps restaurants bypass the complexities and cost constraints typically incurred when building a marketplace from scratch. Importantly, this model also avoids the pitfalls of experimentation, allowing restaurants to invest in proven technology instead. Ultimately, white labeling offers an expertly designed, turnkey solution that can be customized and personalized as needed.
When the right white label partner is engaged, a restaurant’s owning platform can be up and running within 30 days. Once the first NFT in the platform is created, it is free and easy to create more NFTs, create a program and generate revenue in the market. The main investment needed is the time spent on 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 durable products, Web.30 user experiences for your restaurant that will pay off in multiple ways.
Jonathan Teplitsky, CEO of Pipeline Marketing and Director of Community Growth for Horizen Labs, has over a decade of marketing experience at companies like Amazon.com, Uber, and Accenture and has founded several retail startups in the areas of technology and travel. He brings an understanding of how blockchains and digital currencies have the potential to transform the lives of people without access to traditional banking systems. With an MBA from Harvard Business School and a BS in finance and management from New York University, Jonathan is a former army officer and led humanitarian aid missions in Djibouti, Uganda and in Tanzania.