By Ann-Marie Alcántara
$Shake Shack(SHAK.US)$ is offering the cryptocurrency bitcoin as a reward for purchases made at the burger chain using Cash App, a digital wallet offered by $Block(SQ.US)$.
Customers will receive 15% of their purchase back in the form of bitcoin on any Shake Shack purchase made with Cash Card, a debit card available to Cash App users, and by buying items via Cash Boost, a rewards program available to Cash Card members.
Users can search for the promotion in Cash App, under the Cash Boost program and Cash Card tab, through mid-March.
Shake Shack is testing whether it can reach younger consumers on Cash App and if customers are interested in more cryptocurrency options, executives at the burger chain said. Block's largest set of customers are in the millennial and Gen Z age groups, Amrita Ahuja, the company's chief financial officer told The Wall Street Journal in October.
Shake Shack hasn't seen demand from its customers to pay with cryptocurrencies, so this experiment will be helpful in determining if the company should begin accepting them as a form of payment or extending the rewards program at some point, said Jay Livingston, chief marketing officer of the burger chain.
"You're always trying to place your bets on those things that truly will be meaningful and not waste resources on the ones that won't," Mr. Livingston said.
Interest in cryptocurrency has surged, with institutional clients trading $1.14 trillion worth of cryptocurrencies on the Coinbase Global Inc. exchange last year, compared with $120 billion in 2020
Additionally, 62% of cryptocurrency owners increased their use of digital currencies in 2021, and 57% of consumers surveyed want to earn cryptocurrency via a rewards program, according to research from $Visa(V.US)$.
Block has experimented with bitcoin on Cash App since 2018 and began allowing users to send it to others on the app free last year, among other features to encourage people to learn more about the cryptocurrency. Users' familiarity with bitcoin on the app spurred Shake Shack to work with Block on its rewards promotion, Mr. Livingston said.
"If we just started taking crypto right now at our kiosk, it would have very low adoption," Mr. Livingston said. "But through someone like Cash App, who's been promoting it, you will get some more people that want it and that also want to learn."
Customer rewards programs that offer bitcoin are one of the easiest ways for consumers and companies to join the cryptocurrency space, said Alex Adelman, co-founder and chief executive of Lolli Inc., a bitcoin rewards company. Rewards from retailers including $eBay(EBAY.US)$. and $Lowe's Companies(LOW.US)$'s Cos. are available on Lolli.
Rewards promotions like Shake Shack's offer a new way for companies to connect with customers digitally while delivering value to them, said Gracie Page-Fozzati, managing director of technology at SJR, a content marketing consultancy owned by WPP PLC.
"This loyalty scheme effectively subsidizes the democratization of crypto amongst a mainstream audience," Ms. Page-Fozzati said.
Many companies are looking to experiment with cryptocurrency without expectations of positive results, said Karine Hsu, partner at Slope Agencies LLC, a creative agency that has worked with crypto startups. But brands still need a concrete strategy as they experiment and should determine whether consumers are curious at all about cryptocurrencies, she said.
As interest picks up in Web3, a buzzword used to describe a decentralized internet and startups in the cryptocurrency space, companies should see how they can add value to customers experimenting with digital currencies and other related technologies, said Brendan Gahan, partner and chief social officer at the advertising agency Mekanism Inc.
"Brands need to recognize the ecosystem is shifting away -- it is evolving -- and it is maturing, so if you want to play in this space, you've really got to bring something to the table," Mr. Gahan said.