Amidst a period of crypto market turbulence, many restaurants are pushing forward with NFT-based initiatives. But is this a case of sunk-cost fallacy, or a move that has the power to unlock hospitality’s digital future?
It’s been a rough few months for NFT fans. The spectacular crash and burn of cryptocurrency company FTX wiped some €30.19 billion from the market; the total number of sold NFTs dropped 23 per cent in November, having already fallen 25 per cent through October. Major wallet platform Coinbase saw its latest app update blocked by Apple, meaning iOS users could no longer exchange their tokens through the company’s products.
There was also a sharp increase in NFT scams tied to the Qatar World Cup, and anyone considering an NFT investment will surely now be thinking twice. Promoting these products will naturally face increased scrutiny. Indeed, as wallet strings tighten in anticipation of the ‘crypto winter’, onlookers would be forgiven for thinking the party might be over.
Flyfish Club is branded as the first private dining club based on blockchain.
But where others are pulling back and playing it safe, a corner of the restaurant industry is pushing on with high-profile NFT-backed projects. VCR Group’s Flyfish Club recently announced the purchase of its first physical space in Manhattan’s Lower East Side, while Hennessy’s inaugural NFT-powered Cafe 11 is currently up and running at Art Basel. Both promise token holders a real-world experience to go with their digital purchase. Is this a case of sunk-cost fallacy, or could the infusion of this technology in IRL hospitality spaces predict a major shift?
Phygital futures
Like high fashion and luxury retail, the hospitality industry has spent the last year staking a claim in the NFT market with varying degrees of success. For brands like Givenchy and Tiffany’s, translating their transaction-based offers into the blockchain has been relatively simple, but the process has not been so cut and dry for experience-centred hotels, bars, cafés and restaurants. Hospitality, after all, is built on human touch and sensory appeal, and restaurants seem especially ill-suited to life on the blockchain. Taste, scent and service have no working digital substitute just yet.
As such, projects like Cafe 11 and Flyfish are taking the reverse approach, creating physical spaces infused with NFT function. Enter the utility NFT, and the usage of tokens as tools of access, which platforms like NFTable are leveraging to connect token holders with physical tables and F&B spaces. In a world where guests own increasingly little and find themselves streaming, renting, or borrowing everything from housing to media, these projects are betting that the prospect of truly owning an experience holds resonance, exceeding the capabilities of traditional restaurant models. It’s no mistake the top tier of the upcoming NFT-based SHŌ Club is set to provide ‘ownership-like benefits’ including a curated trip to Japan and ongoing access to all future venues.
Renders: The SHŌ Club
Cover and above: Planned for opening in 2023, San Francisco’s SHŌ Club is set to offer ownership-like benefits based on NFTs.
‘Our entire project is based around utility,’ David Rodolitz, founder and CEO of Flyfish Club, told Wunderman Thompson Intelligence. ‘We felt that by taking the traditional membership model and layering in this technology, the NFT component created something that was new and innovative and interesting and changed the value proposition to our members. They own the membership rather than essentially renting a social experience… They still pay for food and beverage. But this is a different mechanism and way of everybody interacting together.’
Experiential equity
The infusion of utility NFTs in the restaurant space might not have the immediate aesthetic or functional impact that self-serve, drive-thru or dark kitchen concepts have engendered. Rather, focus will be placed on extending the venue’s reach and creating a community platform akin to a member’s club. Similarly with member’s clubs, the overarching challenge for designers will be to create flexible venues with enough variety and content to warrant repeated, consistent usage. At the core of the hospitality NFT rush, after all, is an attempt to retain guest loyalty via equity shares in a communal experience.
‘In the world of hospitality, I think we’re seeing a movement toward the recognition that community is an integral part of the success of restaurant and brands,’ Josh Sigel, CEO of SHŌ Group, explained to Eater San Francisco. ‘We really wanted to develop a close-knit group of people we could not only foster a direct connection with, but also create a way in which those individuals could come together.’
So, what kind of restaurant spaces will appeal to such individuals? Considering the wide range of niches and communities NFTs have found buyers in, it is unlikely there will be any one format or consistent theme to aim for. As the NFT train slows, however, the insular, closed-off nature of these limited-access operations will only compound, and designers will first and foremost be required to incentivize guests with unique spatial experiences that cannot simply be ‘right-click saved’ by competitors.
