As Restaurants Experiment with Cryptocurrency, Customers Aren’t
Michael Bozzelli is hell-bent on making it possible for customers at his restaurants to buy pizza and sandwiches with Dogecoin, a cryptocurrency with a Shiba Inu meme mascot. The co-owner of four locations of Bozzelli’s in the D.C. region takes his cues from Elon Musk. The man behind Tesla and SpaceX has been tweeting about Dogecoin with abandon this month, causing its price to skyrocket. “Elon understands its potential,” Bozzelli says. “His track record speaks for itself.”
When Musk told his 48 million Twitter followers Dogecoin is the cryptocurrency “for the people” on Feb. 4, Bozzelli was awestruck. “Dogecoin is for the people and pizza has always been for the people,” Bozzelli says. “I love that for $20 we can feed a family. That’s the most meaningful thing about my business.”
He thinks cryptocurrency, and Dogecoin in particular, is “the ultimate protest against disenfranchisement” and a “rigged financial system” that only works for elites and doesn’t give everyone an equal opportunity to achieve wealth. Right now you can use Dogecoin to tip users on Reddit. Or you can book a room at this Swiss hotel.
A cryptocurrency is a digital currency in which transactions are verified and recorded using blockchain technology. It’s decentralized, meaning there’s no regulating authority such as the government of any one nation. The most well known cryptocurrency is Bitcoin, which was created in 2009. Bitcoin’s price as of Feb. 25 is $50,735.99. Dogecoin’s is $0.054.
Neeraj Agrawal, a spokesperson for D.C.-based think tank Coin Center, calls cryptocurrency “cash for the internet” and explains how transactions work. “Right now there are two main ways to buy—cash or credit card,” he says. “With cash, the transaction is settled immediately. With a credit card, a payment goes through a complex system of intermediaries before it’s settled. Bitcoin is a lot more like cash. You tell the network where you’re sending money. It broadcasts the transaction and coins are moved from my account to your account. No company in the middle can interrupt that.”
Bitcoin didn’t resonate with Bozzelli the same way that Dogecoin did. Two YouTubers with huge followings, Marques Brownlee and Graham Stephan, recently recorded Dogecoin explainers. Brownlee believes Dogecoin is trending because “it makes the world of cryptocurrency that takes itself too seriously less intimidating.” It started off as somewhat of a joke in 2013 when Jackson Palmer from Adobe and Billy Markus from IBM teamed up to create it. Stephan says even its founders are perplexed by its popularity.
Unfortunately, Bozzelli jumped the gun. He issued a press release on Feb. 22 proclaiming that Bozzelli’s is “now accepting” Dogecoin. Not so fast, said the Point of Sale (POS) system provider the restaurant uses. “They deemed it not secure,” Bozzelli says. “We’re actively looking for a work around.”
His goal is to suss out a solution before the Georgetown location of Bozzelli’s opens this spring. Just for fun he calculated that a $16 pizza would cost 266 Dogecoin. “I’m a huge Buddhist,” Bozzelli says. “We say everything contains its opposite. What may have started as a meme could be as serious as a revolution.”
Bozzelli’s wasn’t the only restaurant to alert customers about cryptocurrency capabilities this month. “Yes, Peruvian Brothers accepts Bitcoin,” read the subject line of a Feb. 17 marketing email. Founded by brothers Giuseppe and Mario Lanzone, the business specializing in pan con chicharrón sandwiches started out as a food truck and catering company and recently graduated to a brick-and-mortar shop inside La Cosecha.
This is the Lanzones second go-around at accepting cryptocurrency. City Paper documented their decision to do so back in 2013. They were following in the footsteps of another set of brothers: Tyler and Cameron Winklevoss. The twins, best known for their legal tussle with Mark Zuckerberg over Facebook, bought $11 million worth of Bitcoin in 2013. It’s since made them billionaires.
“They’re friends of mine from the Olympics,” Giuseppe says. They competed on the U.S. rowing team together at the 2008 games in Beijing. “They’ve been to my house. I’ve been to their frickin mansion in the Hamptons. They called me up and said, ‘How come you’re not taking Bitcoin?’” (Mr. Yogato, a frozen yogurt store in Dupont Circle founded by an aerospace expert was another early Bitcoin adopter in D.C.)
Peruvian Brothers heeded the Winklevoss twins’ advice, even though Giuseppe admits he didn’t quite grasp the concept at the time. “We did a press release, but never really understood what it was,” he says. “We were food truck entrepreneurs. We were young and inexperienced.”
Fast forward eight years to 2021. The Lanzones have a better grasp of how Bitcoin works. They recently reintroduced it as a payment method. “The reason Bitcoin is important to us is because we want our customer experience to be the best it can be,” Giuseppe says. “You don’t need a wallet to have money. You can have your Bitcoin in your cell phone and come to us for a sandwich.”
There are several ways Bitcoin transactions work. A common one utilizes a smartphone app called BitPay and QR code technology. Restaurants can either keep Bitcoin in a virtual wallet of sorts or transfer it into a bank account as U.S. dollars, which is much more useful for paying rent, utilities, and staff.
When Peruvian Brothers first accepted Bitcoin at the behest of the Winklevii, only a few customers took advantage of the opportunity. That hasn’t changed. “Nowadays, we haven’t had that many,” Giuseppe says. Most of the restaurants in the District that are experimenting with accepting cryptocurrency report the same.
Some were so discouraged at the lack of traction that they gave up. Red Toque Kebob’s Seth Hajbi says the Shaw restaurant experimented with accepting Bitcoin two years ago but only made one sale. The Diner in Adams Morgan installed a Bitcoin ATM, but ripped it out when COVID-19 hit.
Even though customers aren’t taking advantage of the option to pay with Bitcoin or other cryptocurrencies, restaurants continue to experiment with it in small numbers. The owners share a passion for what cryptocurrency represents and optimism about its future. It’s more ideological than practical. A CNBC article explaining the psychology behind why some people become obsessed with investing in Bitcoin argues cryptocurrency becomes part of one’s identity.
George’s King of Falafel & Cheese Steak in Georgetown, which has been around for decades, started accepting Bitcoin using BitPay about four years ago. “The owners were interested in the currency so they really wanted to make sure that people in D.C. that were also using crypto had that chance at this business,” says marketing manager Heather Albarazi. “There’s such limited availability to use crypto at a spot.”
They’ve tendered less than 10 Bitcoin transactions. Most of them came through in 2016 and 2017. “We haven’t seen an influx of people trying to spend it on food,” Albarazi says. “We really thought we would. Maybe it’s more of a long-term thing?”
sPACYcLOUd Lounge in Adams Morgan started accepting Bitcoin and 35 other cryptocurrencies a week ago. “I know that cryptocurrency is the future as many people and companies are trying to get away from government-regulated banks,” says owner Tatiana “Tati” Kolina. She uses Coinbase, which doesn’t integrate into the restaurant’s POS system. She’s looking for a plug-in. “Right now we’re just going to use the wallet on iPhones,” she says.
So far only one customer has paid with Bitcoin, but Kolina wants to be ahead of the curve in case cryptocurrency takes off. “I know it’s going to take some time for people to get comfortable with it,” Kolina says. “Bigger companies are investing in Bitcoin and it will become more mainstream and people will feel more secure as they learn more about it.”
Kolina is right to broach trust. There are thousands of cryptocurrencies or “altcoins” out there. Some are legit. Others, like One Coin, are scams that have left hundreds of thousands of people in financial ruin. (Let this captivating BBC podcast, “The Missing Cryptoqueen,” about One Coin founder Ruja Ignatova’s Ponzi scheme and disappearance take you through what happens when a cryptocurrency doesn’t use blockchain technology.)
There are other reasons, besides skepticism, that stop more patrons from paying with cryptocurrency for everyday transactions like buying a pizza or a sandwich. “It’s not well suited to being a day-to-day payment system yet,” says Agrawal from the Coin Center think tank. “That’s something being worked on. But at the moment, cryptocurrencies work more like gold than dollars. It’s something people buy and hold for investment reasons.”
Challenges for businesses include the aforementioned issue of integrating cryptocurrency transactions into POS systems, the time and know-how required to manage Bitcoin inventory, and training staff on new technology. Then there’s the actual cost of doing business. “There are fees to use the Bitcoin network,” Agrawal says. “There are times when the fee is very low and is essentially free to send a transaction. Other times it’s $5 or $10, depending on the demand for the network.”
On top of this, Agrawal explains, every time you use Bitcoin to buy something, it counts as a sale for tax purposes. “You have to pay capital gains tax on top of that,” he says. “That’s a huge problem in encouraging and stimulating the day-to-day use of this for something like a restaurant.” In conclusion, he says, accepting cryptocurrencies “isn’t worth it unless you personally believe in it.”
Giuseppe Lanzone is a believer. He cites how fast payment trends can shift. “Back in 2013 when we first opened, we received 30 percent credit card payments and 70 percent cash,” he says. “Now it’s 70 percent credit cards and 30 percent cash. That’s only eight years. So who knows. Bitcoin is a very interesting way of carrying money. I’d love for people to come in and use it.”