Over the past year, the number of restaurants exploring digital engagement in the NFT space has continued to grow as blockchain technology has become more lucrative. But what goes up must come down, and now industry analysts are citing the “crypto crash” of 2022 as a reason to sell rather than invest in this ever-hot industry. But should operators who are just starting to dabble in blockchain-backed customer engagement worry? And exactly how will the bursting of the crypto bubble affect regular entrepreneurs?
“It’s a natural market cycle: bull runs follow the bear, rinse and repeat,” said Gather Network CEO and blockchain expert Reggie Jarath. “It’s the survival of the fittest.”
But while crypto investors in the world of finance might need to pay close attention to the rise and fall of markets, restaurant owners need not follow so closely. Traders may want to know if they should take crypto as their currency and list their restaurant NFTs on Ethereum, or if all of these investments are just a big fad.
The hospitality industry’s engagement with blockchain and Web3 has run the gamut from Wendy’s launch games in the metaverse to Chipotle taking crypto from customers and Wings and Rings allowing franchisees to pay their franchise fees with Bitcoin. Many NFT-backed hotel projects have targeted the 1%, offering NFT memberships sold for thousands of dollars in cryptocurrency.
Recently, President Biden signed an executive order that would lead to federal regulation of cryptocurrency for the first time.
“For the NFT ecosystem to thrive, all NFT-related transactions must be done with the native tokens of the relevant blockchain in nature,” Jarath said. “Brands, on the other hand, are developing user interfaces that make these cryptocurrencies more accessible to less tech-savvy users by pushing the technicalities behind the scenes.”
One of the biggest hurdles for restaurants interested in getting into crypto assets is the steep learning curve for both employees and customers. There were rumors that the NFT themed restaurant Bored & Hungry had stopped taking crypto and although the rumors are unfounded (turns out they were just updating their systems and accepting Apecoin and Ethereum), founder Andy Nguyen said he doesn’t just want to be the NFT restaurant:
“The crypto crash amplifies us even more, because we are not just an NFT brand. We bring a lot of utility and experience to the community,” Nguyen told Nation’s Restaurant News. “The crash eliminates a lot of bad brands. I think it gave us a platform to bring more attention to our brand.
Josh Sigel, CEO of Shō Hospitality Group and founder of the private NFT club, Shō Club, recently started taking regular credit cards in addition to cryptocurrency in an effort to expand his customer base. If crypto is down, customers can still use traditional currency.
“There really isn’t a hard and fast rule that an NFT can’t be purchased with currencies other than crypto,” Sigel said. “Overall, we see tremendous value in the underlying technology of the Web 3.0 space.”
Sigel thinks the crypto crash is more of a “market correction” than a warning sign, and shows that the “get-rich-quick” schemes of people investing in crypto and NFTs just to jump on the trend won’t. not. finally, especially as space becomes increasingly regulated by the federal government.
But if the crypto crash is a sign of survival of the fittest for the fledgling industry, what Web 3.0 hosting concepts will survive? It depends who you ask.
“The crypto crash is the best moment in crypto,” said Peter Klamka, CEO of Cordia Corp. and creator of the Crypto Food Hall NFT collection. “These periods allow for experimentation, lower labor costs and faster time to market because more resources are available. What’s really gone for good is the $10,000 or more from the “NFT Membership Restaurant.”
Klamka, who sells 1,000 unique chef NFTs as an entry to the Cordia food hall for around $200 each, said that while we’re likely heading into a recession, the number of people who can spend money on a Very expensive NFT will decrease significantly.
“[People like us] are investing in NFTs and you even have national chains getting in on the action, but the ones that succeed will be the $25-$100 NFTs that offer customers loyalty points, coupons and a free appetizer,” said said Klamka.
Even though he stated that Cordia would always accept cryptocurrency, none of his customers use it as common currency. People with a crypto wallet are much more likely to spend their blockchain-backed currency on larger transactions.
But not all NFT investors in the hospitality industry agree. Stratis Morfogen, owner of Brooklyn Chop House and Brooklyn Dumpling Shop, strongly believes that crypto is the future of the hospitality industry and that interest in NFTs has not diminished during the crypto crash. He is betting long-term on crypto as he anticipates opening his NFT lounge in the fall, where memberships are sold for up to $100,000.
“You don’t want to be the only one saying, ‘Of, if only I had bought Apple for $5 in 2008,'” he said. “There’s a lot of fear when it comes to this industry.”
Morfogen said it’s extremely important for restaurant owners to see NFTs and crypto as a new way to engage with their customers. It’s the new must-have marketing feature for hospitality, just like websites and social media were when they were the ‘shiny new thing’.
“If you don’t take NFTs seriously, you’re going to miss out on the opportunity of a lifetime,” he said. “It’s not just about cryptocurrency, it’s about building relationships. If you relate to it [crypto enthusiast] community, you will pay dividends for generations.
Contact Joanna Fantozzi at [email protected]
Follow her on Twitter: @JoannaFantozzi