Despite controversies surrounding the virtual currency bitcoin, a growing number of quick-serve restaurants, bakeries, coffee shops, and bars are allowing their customers to pay for their food and beverages via the digital currency.

Bitcoins are a currency that is transferred directly between buyer and seller typically via digital wallets, eliminating the need for bank transaction fees. The currency’s value is based on an ever-changing algorithm.

Bitcoin has been in the news recently because of the collapse of one of the largest Bitcoin exchanges, Mt. Gox in Japan. In late February, Mt. Gox suddenly ceased all operations, costing its users an estimated $300 million worth of bitcoins. The Mt. Gox closure is just the latest in a series of controversies surrounding the virtual currency. Because the global bitcoin market is unregulated and anonymous, opponents say it is an ideal way for criminals to hide stolen goods and drug transactions.

Many restaurant operators, however, believe the payment system is secure and convenient, and that it saves them money on credit-card transaction fees.

Rise, a biscuit and doughnut shop in Durham, North Carolina, began allowing its customers to pay using the virtual currency in late February, and quickly garnered attention from local media and current and prospective customers.

“Why am I paying money to the banks when the price of products are going up and we raised the minimum wage? We have to get rid of these middlemen all over the place.”

“We are right by the universities and we have a lot of techie customers to begin with, but some others wanted to come in just to use bitcoins,” says Tom Ferguson, owner of Rise and Durham Catering Company. “We are the first business in our area to start using bitcoins.”

Ferguson also started accepting bitcoins, he says, because he doesn’t want to keep paying banks.

“Why am I paying money to the banks when the price of products are going up and we raised the minimum wage?” he says. “We have to get rid of these middlemen all over the place.”

Rise expects about five bitcoin transactions a day, which is down from the first day, when one customer bought $100 worth of biscuits and doughnuts using bitcoin, Ferguson says. Bitcoin transactions cost the shop 1 percent of the transaction because it uses a third-party provider, CoinBase, that converts bitcoin currency into U.S. dollars and deposits it in the company’s bank account nightly. Credit-card transaction fees for its point of sale, on the other hand, are around 2.75 percent, he says.

A Subway franchisee in Allentown, Pennsylvania, began accepting bitcoins at one of its stores last November. The Subway store gained attention after owner Sapan Shah hung a “Bitcoin Accepted Here” sign in the window and many people traveled from other cities and states to experience paying in bitcoins. Shah did not respond to QSR’s requests for an interview.

Vegan bakery Sweet to Lick in Long Island, New York, attracted publicity and new customers after it began accepting bitcoins in late January.

“It really has been a conversation piece,” says Sweet to Lick owner Michael Sabet. “As a vegan bakery, we already have more modern and forward-thinking customers. There may be a bigger population [among our customers] willing to try bitcoins than, say, a pizza parlor.”

Because the bakery does not convert bitcoins into U.S. dollars, Sabet says, his cost is “almost nil” at less than 5 cents per transaction, and the transaction is fairly simple and quick, similar to a credit-card transaction; a customer simply takes a picture of a barcode at the POS and the transaction is completed. He’s not concerned about the collapse of the Mt. Gox exchange or the safety and security of utilizing bitcoins. “I don’t use the Mt. Gox exchange,” he says. “Plus, the system can’t be hacked, as far as I can tell.”

The notoriety of offering bitcoins is a great marketing move for restaurants, says Aaron D. Allen, owner of global restaurant consulting firm Aaron Allen & Associates. Offering bitcoin transactions also allows restaurants to better connect with their tech-savvy customers; the early adopters can “deepen their connection” with these guests, Allen says.

While no regional or national quick-serve chains have adopted the technology to date, some say it is only a matter of time.

“I expect to see it [at quick-serve chains] in the next year,” Ferguson says, pointing out that major online retailers like and Tiger Direct are already accepting bitcoins. “I think there is a lot of growth in this. Eventually, it will turn into paying your employees and vendors in bitcoins.”

But Allen says that at this point, bitcoins are more of a novelty use by only a handful of customers.

“I don’t think it will go totally mainstream or hit mass penetration anytime soon,” he says.

Consumer Trends, Ordering, Restaurant Operations, Web Exclusives