Crypto Rewards Programs for Diners
The “eat to earn” concept has been pioneered by companies like Blackbird, Landry’s, and Lolli. Users earn native tokens which can be spent, traded or held. Some programs also offer additional perks like NFT rewards or unlocking memberships. As one tech founder put it:
“This idea of using crypto for consumer loyalty programs has been talked about for years in crypto, but this is one of the first compelling use cases.”
These fledgling crypto rewards initiatives have tremendous potential to bring blockchain technology into the mainstream. But for that to happen, scaling challenges, tax implications and public perception issues need to be overcome first.
Benefits for Consumers
For crypto-curious diners, eat-to-earn programs offer a risk-free way to get involved.
Earn Free Crypto
- Spend $100 at a participating restaurant = earn $5 worth of tokens
- Stack up rewards each time you dine out or order delivery
- No need to understand complex crypto concepts
Gain Crypto Exposure
- Allows newcomers to get hands-on without buying crypto
- People can experience using digital assets IRL
- Overcomes barriers to entry like setting up wallets
Enhanced Loyalty Programs
- More exciting than traditional points or cash back
- Watching token balance fluctuate introduces “gamification”
Benefits for Businesses
For restaurants and food delivery platforms, crypto rewards can unlock new capabilities.
Increase Customer Loyalty
- Offering crypto perks provides competitive edge
- Gets customers hooked on earning tokens
Gain Customer Insights
- Tracking spending on blockchain provides valuable data
- Allows personalized promotions based on habits
Mainstream Adoption Driver
- Introduces cryptocurrencies to wider audience
- Gets people comfortable with blockchain technology
Key Players
There are a few major companies leading the charge when it comes to eat-to-earn rewards.
Blackbird
Based in New York City, Blackbird lets users earn a token called FLY when dining at participating restaurants. The app is still small but offers additional perks:
“Users can collect NFT rewards, unlock memberships that give discounts and access to exclusive events, and vote on decisions that shape the project’s future,” said Blackbird’s CEO.
Landry’s Restaurants
The restaurant giant Landry’s – owner of brands like Bubba Gump Shrimp and Rainforest Cafe – will soon kick off a bitcoin rewards program for its loyalty members. Customers earn 1 point for every $1 spent, with 250 points amounting to $25 in bitcoin.
“This allows customers to gain comfort with the volatility by watching their points go up and down,” explained a Landry’s executive.
The company itself is bullish on bitcoin, too, revealing plans to hold some treasury reserves in the cryptocurrency.
Lolli
Unlike the other eat-to-earn models which focus on in-restaurant dining, Lolli offers an online shopping rewards program. The browser extension gives users bitcoin or cashback when they shop at over 1,000 participating retailers. Lolli makes money from commissions, then passes a share of that back to users.
The company recently raised $8 million in funding to expand its partners. It has seen user growth of 35% year-over-year.
Concerns Around Crypto Rewards
However, crypto rewards programs also come with challenges – from accounting headaches to potential tax issues.
Tax Implications
Per the IRS, spending cryptocurrency triggers capital gains taxes in many cases. This could surprise consumers who expect to simply earn free rewards. Proper reporting of crypto-based loyalty programs remains a gray area.
Accounting Challenges
Tracking cost basis, fair market value at time of transaction, sales tax and more makes accounting much more cumbersome. For business owners, if payments are made in crypto, it complicates payroll and invoicing too. Most users are unaware of these nuances.
Perception Issues
While crypto enthusiasts may be drawn to these loyalty programs, much of the wider public still sees cryptocurrencies as risky, volatile assets synonymous with crime. Restaurants hoping to capture customers’ interest without deterring them face a balancing act.
Conclusion
Crypto rewards programs remain in the very early stages, but have tremendous disruptive potential across many industries. As with any emerging technology, challenges around scaling, technical aspects and public perception lie ahead. But the core value proposition of incentivizing consumers via digital assets is powerful enough to drive continued growth. Expect more restaurants and retailers to buy into the model in 2023.
FAQs
How do I find restaurants offering crypto rewards?
Most programs are still limited to certain geographic areas. In NYC, Blackbird lets you see which spots accept fly tokens. Major chains like Landry’s will promote crypto loyalty initiatives online and on-site. Lolli’s browser extension shows all participating online stores.
What are the tax requirements if I earn crypto dining out?
You may need to pay capital gains tax when spending crypto rewards to make non-crypto purchases. The same rules that apply to selling crypto for cash apply. Each transaction needs to be recorded and reported accurately.
Can I transfer the crypto from loyalty programs to my wallet?
Policies vary by company, with some issuing proprietary loyalty tokens that can only be redeemed for rewards or discounts. Others like Lolli let users withdraw bitcoin to external wallets. Read individual programs’ fine print for the ability to take custody of tokens.
Do I need to already own crypto to participate?
No prior crypto ownership is required. The entire premise is introducing digital assets to mainstream consumers in a simple way. You’ll create accounts within each program’s mobile app or website to start earning and tracking rewards.
What other industries could adopt these kinds of programs?
The basic framework of rewarding patronage or loyalty with crypto has room for innovation across sectors like airlines, hotels, gig platforms and subscription services. Expect to see plenty of experimentation, especially surrounding “web3” and metaverse applications.
