Last spring, “NFT” was the buzzword of the moment, alongside terms like “crypto” and “metaverse” and “Web3,” and at the time, experts argued over whether this next phase of the Internet could change customer (and restaurant) behavior and experiences forever, or if it was just a fad. One year later, we’re starting to get a better picture of how exactly NFTs have shaped consumer demands.
In spring 2022, a wave of NFT membership-based exclusive clubs and restaurants and programs marketed toward the wealthy elite were announced, and since then, most of their openings have been delayed (sometimes indefinitely) or completely scrapped. It started with SHŌ — which was promised to open in San Francisco in fall 2023 as a two-story “culinary entertainment and nightlife experience” operated under SHO Group that would offer a private NFT-backed membership club costing between $7,500-$300,000 depending on which tier you choose.
But according to a recent article published on SFGate, after the groundbreaking ceremony in August 2022, very little work has been done on the site, and the empty space looks “exactly the same” as it did seven months prior. Permits for the site have not been issued, and several permitting steps have not yet been taken. Though representatives for SHO Group did not respond to NRN’s requests for comment, SHO Group CEO Joshua Sigel sat down for an interview with Family Office Insights earlier this year and revealed that only 100 NFTs were sold during the initial private sale, and that the promised wider public sale of the initially promised 3,275 NFTs had not yet happened. Sigel insisted in the interview that they would be fully permitted “within the next four weeks,” though that has not happened, according to SFGate.
As it turns out, Joshua Sigel and SHO group are not the only ones that have struggled to capitalize on the once-buzzy NFT membership-based restaurants. Last March, trendy steakhouse Brooklyn Chop House opened its 25,000-square-foot, multi-floor Times Square location, with promises of a subterranean NFT lounge — with memberships costing between $8,000-$100,000 — coming in fall 2022.
However, more than a year after we initially reported on Brooklyn Chop House’s NFT lounge, the project has been scrapped. Instead, Brooklyn Chop House co-owner Robert Cummins told Nation’s Restaurant News that the basement space originally set aside for the NFT club will eventually be used as a private venue of sorts, like a “more evolved private dining room” that could cater to elite guests, members, and exclusive events closed to the public. Cummins said that he does not think the world of NFTs and crypto has as much allure as it did last year:
“I think that our customer has changed,” Cummins said. “I don’t think they’re thinking about [NFTs] in the same way they once were. We have customers that just want to be private sometimes, and they might pay for that exclusivity, but they don’t want to use crypto in order to get it.”
Another similar project, helmed by New Jersey-based Dragonfly Brands, which was announced in May 2022, promised to sell 250 Dragonfly tokens for about 1 Ethereum (usually available for just under $2,000), in exchange for membership to a virtual loyalty club for Dragonfly Brands’ in-person and virtual restaurant brands. The company also announced it would sell a more expensive higher-tier NFT that would give members access to an exclusive Supper Club, with both virtual and in-person events. But after no updates since last year, Dragonfly Brands CEO Ching Ho confirmed with NRN that the project had been abandoned early on in the development process as it had “not quite worked out,” though he declined to go into further detail.
Even NFT-based programs that aren’t specifically catered to the 1% have been experiencing delays, like ShiftPixy’s NFT-based loyalty program, which offers consumers the ability to mint unique NFTs in exchange for digital benefits for their virtual restaurant brands. First announced last spring, the NFT loyalty program has not yet launched and is “still under final development” and the company has not released any recent updates on the program.
But does this trend of delayed and canceled projects necessarily mean that NFT-based restaurant experiences and membership programs are going the way of the fax machine? Likely not, NFT expert and trademark attorney Michael Kondoudis said.
“These clubs were never mainstream-- They targeted a small demographic,” Kondoudis said, though he added that there is evidence that Web3 has “lost significant momentum since last year, as trademark applications for Web3 products have declined 66%.
“These numbers are not a surprise given the current economic headwinds and the threat of recession,” he added. “Does it spell doom? I think it is more accurate to characterize the stagnation of these clubs as a result of the weakness in the overall economy and the slowdown in tech specifically.”
There are some successful NFT-based members-only clubs and restaurants out there, like Vinyl Fish Club, which was announced at the end of last year and opened in early 2023 in West Palm Beach, Fla. Separate from the regular restaurant experience is the NFT membership program, which does not appear to have launched yet, but members can buy NFTs on OpenSea connected to exclusive experiences including members-only events, rare Japanese whisky and sake tastings, popup events and bottle service. Vinyl Fish Club did not respond to requests for comment.
Another NFT-based concept is Flyfish Club — created by Gary Vaynerchuk’s VCR Group — which sold 1,151 memberships, totaling $14 million in less than one minute during an initial pre-sale and subsequent public sale in Dec. 2022 and Jan. 2023. Although the space was scheduled to open in New York City sometime this year, David Rodolitz said that the opening timeframe has been pushed back because they were looking for a very specific type of space (11,000 square-feet), which can be difficult to come by in New York. But now that the company has secured its space in Nov. 2022, Rodolitz is confident that the project will soon come to fruition and will open its doors by the end of the year, though construction has not yet started:
“We have not deviated from our original plan,” he told NRN. “It’s been a bit delayed from securing the right space, but all of the negativity around NFTs and crypto; lessening in value has zero impact on us. We want our members to purchase the membership and be able to hang out at our club. And that’s what’s happening.”
So, is the NFT membership-based culinary club dead? While there will always be a home for extravagant and exclusive drinking and dining experiences, the clientele that would spend six figures on a virtual membership card is very niche. Even when the turbulent economic circumstances begin to smooth out, most people won’t be able to afford this kind of Web3 experience (and that explains why so many have died out). The NFT programs that stand the chance to drive digital innovation within the restaurant industry are from brands like Starbucks that are using NFTs as a tool to build loyalty and engagement in new ways.
Contact Joanna at [email protected]