Last spring, “NFT” was the buzzword of the moment, along with 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 for always, or if it was just a fad. One year on, we’re starting to get a better picture of exactly how NFTs have shaped consumer demands.
In the spring of 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 scrapped entirely. It started with SHŌ – promised to open in San Francisco in the fall of 2023 as a two-story “culinary entertainment and nightlife experience” operated under the SHO Group that would offer a private NFT-backed membership club costing between $7,500-$300,000 depending on the 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 before. Permits for the area have not been granted, and several permit steps have not yet been implemented. Although representatives of 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 first private sale, and that the promised wider public sale of the originally promised 3,275 NFTs had not yet occurred. Sigel insisted in the interview that they would get full permission “within the next four weeks,” although that has not happened, according to SFGate.
As it turns out, Joshua Sigel and the SHO group aren’t the only ones struggling to make their NFT member-based restaurants a reality. Last March, trendy steakhouse Brooklyn Chop House opened its 25,000-square-foot, multi-story Times Square location, with promises of an NFT lounge — with memberships costing between $8,000-$100,000 — coming in the fall of 2022. However, confirmed CEO Stratis Morfogen with NRN that six months after it was supposed to open, the underground NFT club has been delayed indefinitely due to State Liquor Authority permitting issues, and other “new restrictions,” though Morfogen declined to go inside in more detail.
Another similar project, led by New Jersey-based Dragonfly Brands, 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 in a virtual loyalty club for Dragonfly Brands’ personal and virtual restaurant brands. The company also announced that it would sell a more expensive higher-level NFT that would give members access to an exclusive Supper Club, featuring both virtual and in-person events. But after no updates since last year, Dragonfly Brands CEO Ching Ho confirmed to NRN that the project had been abandoned early in the development process as it “hadn’t quite worked out,” though he declined to go into detail.
Even NFT-based programs not specifically tailored to the 1% have experienced delays, such as ShiftPixy’s NFT-based loyalty program, which allows consumers to create unique NFTs in exchange for digital benefits for their virtual restaurant brands. First announced last spring, the NFT loyalty program has yet to launch and is “still in 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? Probably not, said NFT expert and trademark attorney Michael Kondoudis.
“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 with 66%.
“These figures are not a surprise given the current economic headwinds and the threat of recession,” he added. “Does it mean doom? I think it is more accurate to characterize the stagnation of these clubs as a result of the weakness of the overall economy and the decline of technology in particular.”
There are some successful NFT-based clubs and restaurants out there for members only, like the Vinyl Fish Club, which was announced late last year and is set to open in early 2023 in West Palm Beach, Florida. Separate from the regular restaurant experience is the NFT membership program, which doesn’t appear to have launched yet, but members can purchase NFTs at OpenSea linked to exclusive experiences, including members-only events, rare Japanese whiskey and sake tastings, pop-up events and bottle service. Vinyl Fish Club did not respond to requests for comment.
Another NFT-based concept is the Flyfish Club—created by Gary Vaynerchuk’s VCR Group—which sold 1,151 memberships, totaling $14 million, in less than a minute during an initial presale and subsequent public sale in December 2022 and January 2023. The space was planned to open soon in New York City, David Rodolitz said the opening time frame has been pushed back because they were looking for a very specific type of space (11,000 square feet), which can be hard to come by in New York. But now that the company has secured a place in November 2022, Rodolitz is convinced that the project will soon be realized and will open its doors by the end of the year, even if construction has not yet started:
“We have not deviated from our original plan,” he told NRN. “It has been a little delayed from securing the right space, but all the negativity around NFTs and crypto; reduction in value has zero impact on us. We want our members to buy the membership and be able to hang out at our club. And that’s what happens.”
So, is the NFT member-based culinary club dead? While it will always be a home for extravagant and exclusive drinking and dining experiences, the clientele spending six figures on a virtual membership card is very niche. Even when the turbulent economic circumstances begin to smooth out, most people will not be able to afford this kind of Web3 experience (which explains why so many have died out). The NFT programs that have the chance to drive digital innovation in the restaurant industry are from brands like Starbucks that use NFTs as a tool to build loyalty and engagement in new ways.
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