Traditionally, digital fare like non-fungible tokens (NFTs) is not something you find on a restaurant menu. What diners get on their plate, rather than what they get in their digital wallet, is considered the key to a restaurant’s success. However, a growing number of restaurant innovators are looking to leverage the popularity of NFTs to help attract customers and fuel business growth.
“We couldn’t help but notice all of the buzz and excitement surrounding the NFT space,” says Jonathan Almanzar, co-founder of Chick’nCone, an innovative restaurant chain with dozens of locations around the world. “A forward-thinking spirit is what has really propelled our brand thus far and we were confident that if we established an NFT program of our own, it would successfully take off.”
The buzz that Almanzar refers to drove NFTs to become a $41 billion industry by the end of 2021. Primarily, the NFTs fueling the boom were digital assets bought as investments. The limited edition artworks — some of which were even backed by celebrity endorsements — were purchased with the belief that their value would only increase on secondary markets.
The blockchain-based utility that can also be built into NFTs, which played a minor part in the early NFT boom, is something that the restaurant industry is more focused on. In essence, NFTs can become a type of digital key that grants their holders access to a wide range of perks. For restaurants, this can mean using NFTs as a gateway to special events, special menu items, and even special venues. Many restaurants are betting that NFTs can not only take customer loyalty to the next level, but that they can also provide new revenue streams that leverage their reputation and intellectual property.
NFTs as a membership tool
Exclusivity is central to the allure of NFTs. The blockchain technology upon which NFTs are built gives them the novel quality of being a digital asset that is unique, hence the term “non-fungible.” Whereas the image captured by the NFT may be easily copied, the owner of the NFT also holds the blockchain record that establishes its provenance and singularity. In other words, there may be many copies, but there is still a verifiable original.
NFT exclusivity is also found in the limited numbers of NFTs that are included in NFT drops. Bored Ape Yacht Club NFTs — one of the most well-known collections to date — are limited to 10,000 unique variations. Those who own them, including Tom Brady, Justin Bieber, and Madonna, are amongst an exclusive group of the collection’s buyers.
Restaurants are betting that the exclusivity associated with NFTs can be used to their advantage. By issuing them in limited numbers, the restaurants can create exclusive “rewards clubs” that include only the most dedicated fans.
Gary Vaynerchuk, who includes restaurant entrepreneur among his many titles, is maximizing the allure of exclusivity in the model for his Flyfish Club, which is billed as the world’s first NFT restaurant. The restaurant, which is scheduled to open in 2023, will only serve its NFT holders. The initial NFT drop, which took place in January 2022, included 1,501 Flyfish Club NFTs.
In most cases, restaurants entering the NFT space continue to serve those who have not bought in, but provide token holders with exclusive access to other perks. These can include exclusive offers, secret menu items, and even access to specially designated dining areas.
NFTs as an investment tool
Jonathan Almanzar took his chain’s NFT effort in a different direction, allowing token holders to benefit financially as his business expanded. The Chick’nCoin, which is the name of Jonathon’s NFT, gives holders ownership of a certain geographic area. When a Chick’nCone franchise is opened in that area, the NFT holder gets 50 percent of the initial franchise fee as well as 2 percent of the sales within that region for the first six years.
Jonathan attributes his innovative approach to utilizing NFTs to a shift in mentality that restaurant owners may want to consider.
“Our goal is to be a technology company that sells chicken, rather than a restaurant that sells NFTs,” Jonathan explains. “With that as our goal, entering the world of NFTs was a natural next step.”
With many businesses seeking to establish a viable presence in the metaverse, it would seem that restaurateurs who find a formula for success with NFTs will have a competitive edge.
“We are in competition with every single franchise concept on the planet,” Jonathan says. “What differentiates us from them is that we are willing to take risks and embrace technology and innovation. Moving forward, that will be our secret sauce.”