In 2023, the restaurant industry suffered 4,500 more independent restaurant closings than openings due to increasing costs, dwindling margins, and a surge in consumer preferences for fast-food and delivery. Decreased traffic in restaurants has been a major issue, and solutions have been hard to come by.
Crypto may be an avenue to alleviating some of these problems as well as another way for restaurants to differentiate themselves from its competitors. Currently, there are a few programs circulating in the industry, utilizing many different cryptocurrencies. In particular, Blackbird is a program with the purpose of creating a network of customers and restaurants using its own cryptocurrency.
WHAT IS BLACKBIRD
Blackbird is a free restaurant loyalty app founded by Ben Leventhal, founder of Eater and Resy, that offers customers the ability to use a cryptocurrency called $FLY to make purchases at participating restaurants. Diners accumulate $FLY currency for each dining experience – similar to airline miles. However, $FLY currency cannot be redeemed or exchanged for cash.
When users log into the app, they are confronted with a map showing all participating restaurants, making the app visually appealing and easy to navigate. The app has another feature, Blackbird Pay, in which customers can pay for their tab directly in the app whenever they choose, eliminating one of customers’ greatest hassles: waiting for the bill.
The app allows restaurants to view customers’ dining history, track repeat customers, and offer promotions and loyalty rewards for frequent diners. Though crypto is a unique feature of the app, it is optional, and restaurants can decide to accept the $FLY currency or wait to implement that aspect at another time. Unfortunately, many restaurants on the app have been hesitant to adopt the $FLY cryptocurrency feature due to an overall distrust of crypto amongst many of the restaurants.
REASONS TO HESITATE
This reluctance defeats the purpose of the app, causing issues for Blackbird, restaurants, and customers. There must be an overall buy-in of $FLY and the crypto feature to get significant value from the app.
The volatility and uncertainty of crypto is another reason leading to distrust. With many programs, restaurants must keep track of the inflow and outflow values of cryptocurrencies during every transaction for tax purposes. Taxes are not due at the time of every transaction; they must be reported at the end of the year. So, pristine recordkeeping is a necessity.
A differentiating feature of crypto is the irreversibility of transactions. However, this will make refunds an inconvenience as well, potentially leading to inefficient operations since every refund payment must be done manually and individually.
REASONS TO ADOPT
On the other hand, crypto can be new and exciting for restaurants and their customers. Simply accepting crypto will attract many new customers. Many of Blackbird’s first users are avid crypto enthusiasts eager to be a part of this new technology; crypto users are always looking to use and propel crypto as often as possible.
According to a Stilt study, about 94% of crypto buyers are between 18 and 40 years old (Gen Z or Millennials). Crypto obviously speaks largely to Gen Z and Millennials, and if they are your target market, there is a lot of room for growth within the industry for your restaurant.
An added benefit is that crypto is more secure than credit and debit cards. Rather than data being stored in a centralized hub, making customers more vulnerable to attacks, data is stored in crypto wallets and every transaction is verified and recorded by the blockchain general ledger.
All transactions are permanent and irreversible, so they cannot be tampered with or altered. This allows restaurants to better manage their cash flows. In addition, processing fees, on average, are much lower than traditional credit card processing fees, which can reach upwards of 4%. Blackbird Pay offers a flat 2% processing fee, while some other crypto processing fees around the industry can be as little as less than 1%. There are no international currency payment fees either.
Since crypto is not controlled by any government or country around the world, it is not impacted by rates being changed or manipulated, allowing crypto to avoid inflation: a serious challenge for restaurants and customers in recent times.
VIGOR’S VIEW
Decreased foot traffic has been a major concern for many restaurants, and it seems to be a trend that will continue for the foreseeable future with inflation and the increase in delivery services. Crypto may be a path worth considering to increase traffic and attract new customers.
Crypto is gaining in popularity every day, and the last thing you want is the regret of not acting sooner. Blackbird is a differentiating factor that, when used to its full potential, can attract new diners, strengthen loyalty, and increase sales.
