Since the pandemic upended dining habits, full-service restaurants have struggled to bring people back to their tables. Last year, about 4,500 more independent restaurants closed than opened, suffering from rising costs, shrinking margins, and an increasing preference from consumers for fast-food or delivery.
Ben Leventhal, the co-founder of Eater and Resy, is currently building a platform with the goal of reversing this trend: a loyalty app called Blackbird, which he hopes will make restaurants more connected to each other and to their customers. Crucially, Blackbird is unique as a consumer app in that it relies on crypto. When users check into a restaurant in the app, they earn a cryptocurrency called $FLY. Leventhal hopes that restaurants will accept $FLY as a form of payment, creating a network effect in which an ever-growing pool of money is circulated among restaurants.
And on July 30, Blackbird announced a payment processing system called Blackbird Pay, which allows diners to pay for their meal directly inside of the Blackbird app, at any time during their meal, with a credit card or a crypto. “Compared to old legacy systems, Blackbird Pay is massively streamlined, and we think it’s kind of magical for consumers,” Leventhal says.
Crypto evangelists have held up Blackbird as a paragon for mainstream crypto adoption and a case study for how crypto might soon be implemented into many facets of life. But so far, restaurants have been leery of adopting the crypto aspect of the app, meaning that diners have struggled to find ways to even spend the points they have earned. And Leventhal himself has de-emphasized the app’s crypto nature in favor of a more holistic vision for the company. The current state of Blackbird exemplifies both the promise of crypto and its rocky rollout thus far in public life.
“So far, there’s no indication that we’ve seen that leading with crypto is the right answer,” Leventhal tells TIME. “The broader idea and opportunity is to create a system and a currency that has tremendous value in the eyes of consumers—and to use that currency to start to change consumer behavior in ways that benefit the restaurant industry.”
Collecting customer data, building customer loyalty
Blackbird began operating in April 2023 and is currently available in over 150 restaurants, mostly in New York, with a handful in Charleston and imminently, San Francisco. The company raised $24 million in funding in the fall, led by the crypto powerhouse venture fund a16z. When a user downloads the free app, they can scroll across a map of participating restaurants and message the restaurant for a reservation. When they physically check into a restaurant, that business can then see their dining history. Leventhal argues that the more that consumers and restaurants know about each other, the better the experience is for both sides.
“Restaurants don’t have data and information to allow them to have a sophisticated marketing strategy for retention, loyalty and connectivity,” he says.
The “check-in” feature of Blackbird appealed to Roni Mazumdar, a restaurateur who runs five full-service restaurants in New York, including Dhamaka and Adda. He joined Blackbird a few months ago. “In the past, we would have to remember guests in some shape or form or look at a counter that existed on Resy, and then figure out how we want to take care of this guest who might have been here 52 times in two years,” Mazumdar says. “When you understand what kind of loyalty one has toward you, based off of them coming in and quickly scanning, that to me is like the coolest feature ever.”
Billy Van Dolsen, the owner of the restaurant Sereneco in Brooklyn, also signed up for Blackbird earlier this year, and says that he gets a “handful” of check-ins from Blackbird a day. “Restaurants can be run pretty loose, especially with things like customer loyalty and building regulars. But having systems in place has helped us,” he says. The fourth time that a patron checks into Senereco on Blackbird, for instance, they automatically get a free appetizer.
Restaurants generally pay $89 a month to use Blackbird. Many owners are excited about the newfound ease with which Blackbird allows them to track repeat customers. (Blackbird says that diner information is kept on the company’s databases, and “limited and governed by local privacy regulations and requirements.”) Blackbird could also enable restaurants to prioritize their most valuable tables for regulars, who they know might tip well or order a bottle of wine.
But some restaurants are less excited about $FLY, the optional crypto element. Diners accrue the currency from going to restaurants in a similar mechanism to earning airline miles, but $FLY, which operates on Coinbase’s blockchain Base, cannot be redeemed for actual cash.
Van Dolsen is considering allowing customers to buy merch with the $FLY they’ve accumulated, but is hesitant to allow them to use it to pay for their meals. “As an operator, that’s not something I’d be excited about: If they’re a regular at a different place, and this is their first time here, and they’re just using their points here,” he says. “They’re loyal to the Blackbird network, but that doesn’t help my business, necessarily.”
Leventhal acknowledges he’s heard this feedback from restaurant operators. “I’ve built my career on believing each individual restaurant knows what’s best for itself. If you’re an independent restaurant and you want to go it alone, god bless: We wish you the best,” he says. “But we don’t think that’s the right answer—and that small, independent restaurants that behave as islands are ultimately at extremely high risk for closing because they’re not making any use of the network that exists around them.”
Mazumdar enables check-ins, but not the use of $FLY at his restaurants, though he says he’s excited to do so down the line because of the potential payoff. “I don’t look at a transaction as a one-off. I think there will be some give and take,” he says. “For the most part, you’re creating a serious pool of people that can come back and build a longer term relationship.”
Crypto fanatics embrace Blackbird
Some of Blackbird’s first wave of users are not fine dining experts but rather members of the crypto industry, who are incentivized to support projects that could uplift the entire ecosystem. While other crypto apps have previously shown promise—including the fitness app Stepn and social media platform Farcaster—most have not been able sustain their success or reach widespread adoption.
One of Blackbird’s early adopters is Jay Yu, a 22-year-old Stanford student who runs the college’s blockchain club. Yu has a summer internship in New York and has checked into Blackbird restaurants over 20 times. “I’ve used consumer crypto apps in the past that are supposedly new innovations, but to me, they didn’t seem like a big leap forward,” he says. “Blackbird is definitely a leap forward in terms of crypto user experience and tying some of this technology to real world stuff.”
“Yu has already benefited from Blackbird’s perks, including free drinks and desserts from checking into the same restaurant multiple times. But while Yu has accrued over 17,000 $FLY from his activity on Blackbird, which amounts to about $170, he hasn’t yet found a restaurant in his searches on the app that will accept it as payment. So he’s still sitting on his stash. “The restaurants themselves seem to be a little bit confused as to what these $FLY points actually are and represent,” he says.
A similar rewards program has been tried before: Starbucks Odyssey, a self-proclaimed “revolutionary Web3 experience” in which users earned perks for buying coffee and completing online games. At its peak, aggressive crypto traders bought and sold Starbucks NFTs for thousands of dollars each. But Starbucks shuttered the program in March.
Read More: Why Starbucks NFTs Are Being Sold for Thousands of Dollars
Yu has also been unsuccessful in his attempt to use Blackbird Pay, the new payment processing system that the company has been quietly testing in a few select restaurants. Leventhal says that Blackbird Pay could ease one of the most annoying parts of dining: waiting for the check.
But Yu says that his several attempts at trying to pay his bill with Blackbird Pay were riddled with confusion and ultimately failed. “Maybe the restaurant owner knows what to do with it, but the actual server that’s waiting on the table has no idea what this is,” he says. “Some of these disconnects need to be ironed out.”
Blackbird Pay is incentivizing restaurants to make this transition by offering lower payment processing fees. While typical credit card fees can be as high as 3.75%, Blackbird charges a flat 2% for restaurants to use the Blackbird Pay network.
While this incentive interests restaurants, it does mean that Blackbird is taking a loss every time they have to process a premium credit card. When asked about the sustainability of this model, Leventhal responded: “Processing fees are a moving target, but they are consistently a major expense for restaurants. Of course we are shouldering some costs for our restaurant partners. That is one way that we’re investing in the future of restaurants.”
Blackbird’s ambivalent relationship with crypto
All of these factors mean that Blackbird currently has a multifaceted relationship with the crypto world. Leventhal believes that crypto and blockchain technology can offer a uniquely powerful solution for binding restaurants and diners together. Crypto fanatics want to spend cryptocurrency with Blackbird as something of a justification for continued investment in their industry. But most restaurants don’t want to deal with crypto at all—and some casual prospective diners carry an inherent distrust of crypto projects.
While Van Dolsen says that he’s not sure how the crypto aspect of Blackbird will work, he has faith in Leventhal to figure it out, given his track record. “When Ben built Resy, it was a customized restaurant-focused product that was better for us, at a lower price point,” he says. “I think they’re trying to do something similar here: There’s an opportunity to build a network, understand who their regulars are, and connect more directly.”
Time will tell if Blackbird can become the ambitious one-stop shop that Leventhal envisions: a restaurant discovery app, payments system, and loyalty program all in one. Doing so requires winning over the many restaurants and diners who want nothing to do with crypto at all. If restaurants don’t choose to accept $FLY, then Blackbird’s value to the restaurant ecosystem could be limited.
“There are certainly bleeding-edge crypto adopters that are here for the crypto. But they don’t represent the scale base of customers for Blackbird,” Leventhal says. “Our job is to build something magical from a consumer tech standpoint. Where we can use the blockchain to create that magic, we will. But we will never force crypto to the consumer.”
