Wendy's Backpedals Uber-Like Surge Pricing After A Frosty Reception
UPDATE: Well, that didn't take long! Wendy's is clearing the air that it's not planning on rolling out dynamic pricing, claiming it was a misinterpretation by the press regarding slide 15 of its earnings presentation. A spokesperson told Quartz, "To clarify, Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest. We didn’t use that phrase, nor do we plan to implement that practice”. Thank goodness!
The wording is a little ambiguous, as the spokesperson seems to be splitting hairs over the phrase surge pricing. However, they went on to make clear that patrons will not pay higher prices during peak periods.
"We said these [digital] menu boards would give us more flexibility to change the display of featured items. This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants," the spokesperson said. We have no plans to do that and would not raise prices when our customers are visiting us most."
The spokesperson added that any features it tests in the future "would be designed to benefit our customers and crew members."
The spokesperson added that any features it tests in the future "would be designed to benefit our customers and crew members."
"Digital menu boards could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day," the spokesperson said.
Make of that what you will.
Original article:
American fast food institution Wendy's has just hinted that dynamic pricing and menu offerings are coming to a local restaurant near you. That's right, depending on the time of the day, you could be paying $5.50 for a Dave's Single or $15.50. That's late-stage capitalism at its best, folks.
In its recent fourth quarter earning presentation (slide 15, as shown below, to be exact), Wendy highlighted its plan to roll out dynamic pricing to all restaurants equipped with digital menu boards. The presentation states that the company is investing $30 million to implement this system by early 2025 as a test, initially anyway.
Source: Wendy's
Dynamic pricing—or surge pricing—is something most of us are already familiar with. Airline ticket prices and rideshare (Uber or Lyft) rates fluctuate based on demand. Prices can be low during slow periods, then suddenly peak when the need is high. Wendy's believes that the idea will succeed in the fast food business, but there's more at stake here for customers than attracting more foot traffic during traditionally slow hours. Long-time patrons of the franchise will probably call this price gauging.
Wendy's says that while prices will go up at peak periods, like breakfast, lunch, and dinner, customers will be able to enjoy discounts on their favorite food items at quieter times of the day. The company hasn't defined what the cap on the pricing extremes will be, but you probably won't be getting a large pack of fries for 99 cents at 11:23pm. We're also interested to know how long the prices will "hold" for before the algorithm initiates a change.
It's understandable that the primary reason for this initiative is really to maximize earnings for Wendy's branches at ALL times of the day, but we can imagine that this will severely change the choices made by regular customers. Fundamentally, a $13 burger (that folks know usually costs $5) will likely drive them to find other restaurant options. (That is, assuming other fast food chains don't follow suit.)
