Wendy’s is having a roller coaster of a week, and it’s all of their own doing. On Monday morning, reports came out that Wendyâs new CEO revealed on an investor phone call that the company was considering following a “dynamic pricing” model, starting in 2025. The company confirmed the leak and most people understood this to be similar to Uber’s surge pricing, meaning that the cost of a Wendyâs meal will fluctuate based on the productâs current demand, the time of day, and the storeâs location. Wendy’s statement also shared that they’re planning to introduce daypart offerings (menu items that are only available at certain times of the day, like breakfast) and utilize AI for menu changes and âsuggestive sellingâ based on factors like ââweather, for example. As you can imagine, people were *not* happy about the dynamic pricing idea. We found the beef, Wendyâs! It was with your price-gouging.
Obviously, Wendy’s got dragged pretty hard. Even Senator Liz Warren got in on the action, calling out their corporate greed. There was such an uproar that Wendy’s started backtracking pretty quickly, pulling out the ole “fake news” chestnut and blaming the media for misconstruing their own words.
Wendy’s said on Wednesday it has no plans to raise menu prices at times of peak demand, after the burger chain was scorched on social media sites for comments its CEO made earlier this month suggesting the chain may start testing “dynamic pricing.”
CEO Kirk Tanner told investors on a call this month that starting as early as 2025, Wendy’s would begin testing features including “dynamic pricing and daypart offerings”.
Dynamic pricing refers to surge pricing based on demand, especially during peak hours of the day. Many people associate it with shifting airline ticket prices or how ride-hailing service Uber adjusts fares at busy times.
Tanner’s comment sparked an online backlash this week, with some vowing to stack their freezer with the company’s signature “Frosty” milkshakes to hoard for summer months. U.S. Senator Elizabeth Warren, in a post on the social media platform X on Wednesday, called it “price gouging plain and simple.”
Wendy’s backtracked, saying in a statement to Reuters on Wednesday that it “would not raise prices when our customers are visiting us most.”
Its initiative to add digital menuboards to certain stores would allow Wendy’s to offer discounts to customers more easily, “particularly in the slower times of day,” the company said.
Wendy’s also claimed the menuboards would provide more flexibility to change the display of featured items, saying the comments were “misconstrued” in media reports to raise prices during periods of high demand. “We have no plans to do that,” the company said.
Tanner’s comment was a hot topic at a restaurant conference in the Dallas area on Wednesday, with several executives responding warily to the idea that customers – already skittish after recent price increases – would welcome fluctuations in prices.
“I don’t see it taking off any time soon,” said Victor Fernandez, a senior analyst at restaurant analytics firm Black Box Intelligence.
Michael Lukianoff, CEO of SignalFlare.ai, who has consulted with restaurants about pricing for years, said “dynamic pricing” is a great success in other industries such as airlines, but would not work in restaurants. Customers will shop elsewhere,” he said.
Here’s a free tip for Wendy’s executives and marketing team: If you don’t plan on raising prices based on demand, don’t refer to it as a pricing module that literally means raising prices based on demand. Let’s be real here. When they confirmed their “dynamic pricing” plan, they totally intended on trying out surge pricing. It was just a terrible idea that turned into a PR nightmare and they had to come up with the whole, “We meant it’ll be cheaper to eat during off-hours, not more expensive to eat during prime hours!”
As for what those restaurant consultants said about it not taking off? Yeah, no sh-t customers will shop elsewhere. That said, and I hate to be a doomsayer here, but it feels like weâre at a crossroads and veering towards a slippery slope. It only works in the airline industry because consumers don’t have a freaking choice, as every airline screws us with dynamic pricing. Maybe Wendy’s backed off for now, but now that the cat’s out of the evil corporate ideas bag, I have a sinking feeling that dynamic pricing could lead to a new era of capitalism. It feels like it’s only a matter of time before someone else tries surge prices but packages it differently. Sure, right now, having fast food competition may feel like a safehold, but if someone tries it and the new model is considered successful, you can bet your bottom dollar that itâs only a matter of time before *all* fast food restaurants start doing it too.
Photo note by Celebitchy: These are actual memes from Wendy’s on Instagram along with a photo of the Where’s the Beef commercial featuring Clara Peller. RIP. Credit Getty and via YouTube
It will be like the self checkouts and gradually pop-up everywhere. Also, like self checkouts, it will be something we do not want and detest.
Apparently Iâm in the minority but I love self checkout
Same. I can go through quickly and donât have to talk to anyone đ
I mean they hadnât gone viral since âWhereâs the Beef?â, so I suspect this couldâve just been part of a pr/marketing plan.
BTW, for fast food, thereâs already ~defacto surge pricing at McDonaldâs in the Northeast if you look at the difference between prices at the rest areas on 95 in CT (which are closed when not busy) vs a neighborhood McDonaldâs.
Iâm all for capitalism, but I do think those businesses considering surge pricing should think long and hard first and most should not do it. It can be a real turnoff for people because people like and need – especially for business and budgeting purposes – consistency. People are willing to pay a reasonable price with profit margin, but if they canât know what that is and count on it, theyâll go somewhere else where they can.
If I had the capital, I would immediately start developing an app âHow much will my burger cost right now?â to track in real time fast food dynamic pricing. I would be a bazillionaire if all of the drive thrus go to this model.
In my town, there is a Wendyâs, BK, McDâs and A&W all on the same block. Does Wendyâs think once you walk in the door or pull up to the drive thru, you wonât care about a $8 burger, or not notice?
Actually, yes, that’s exactly what they think. And they’re not entirely wrong. Let’s say you have a 45 minute lunch break, you drive to the restaurant, you get up to the drive thru speaker or counter to order after a wait of a several minutes, and you even happen to notice that the price for your meal is a couple dollars more than it used to be, chances are good that you’ll consider the time crunch you’re in, realize you don’t have time to go restaurant hopping, and just suck it up. And sure, you may not come back the next day, but you’ll be back eventually, when you get bored of eating at the other few places that are available nearby. Wendy’s is not going to be disappointed about a drop in the customer count if they can make the same money selling fewer burgers.
I agree that it would work once because if you’re already there and time is limited and you’re hungry but if I got stung by an unexpectedly high priced burger I wouldn’t go back again, ever.
“Dynamic pricing won’t work in restaurants”? Do they not realize that more upscale sit-down restaurants do this already? Prices go up on evenings and weekends for the same meal at some places.
While that is common, those prices are static, and if you book the meal weeks in advance, you still know exactly what the price will be when you get there. There’s transparency. It’s not the same as pulling into a drive thru having no idea what to expect in that specific visit in terms of pricing.
And how is it any different than lower prices for certain items at non busy times, like during happy hour? They just should have phrased it differently.
To be fair, though, places that offer happy hour have a normal fixed price for their menu items, and then advertise them as being legitimately cheaper than the normal price during specific times. What Wendy’s was proposing would allow them to change prices on a whim. Again, it comes back to a lack of transparency, and the ability to know what you’re going to pay before entering the establishment.
Also, I have no doubt at all that Wendy’s would have structured it just like Uber’s surge pricing: there’s the regular price, and then you pay MORE during peak times. This was never going to be a way to sell Wendy’s food for less.
@Whatever
agree with everything you wrote here!
What concerned me was the possible “customer discrimination”. If they are counting cars maybe next they record cars. Then whenever they see your car they jack up the price.
Ever since wendys main shareholder has been Norman peltz- Nicola dad, it has been one thing after another. It’s obvious they don’t eat fast food.
Dave Thomas, Founder of Wendyâs, would NEVER!!
Whatâs really stupid is that they could have done really well by having lower prices in the afternoon for the work from home crowd. In my student days, most of my restaurant eating was lunch specials at 2:30. Was late lunch/early dinner.
Do we think it could backfire like the self-checkout counters have? I mean, what fastfood has going for it has never been quality, it’s been convenience and low cost. The prices have already gone up, BK for 4 is almost a sitdown meal, we stopped going there, and we aren’t exactly low income. If they add dynamic pricing on top, they will take away both advantages: if the surge happens because of demand, it means you get a long wait AND a high price. How long before many people decide that it’s just not worth the hassle and the uncertainty and that they’d rather pay $10-20 more to order higher quality food from a real restaurant?
“Fake news chestnut”….. that made me laugh out loud.
Late stage capitalism in America is truly an ugly thing.
Yep
Yep. Carnivorous and snake-eating-tail, to boot. More and more, companies really don’t seem to care if they piss off their customer base.
Jordan Howlett on YouTube is the self styled president of The Fast Foods Secrets Club – his response was to ask – will the workers get dynamic pay increases? And then he gave away the recipes for the Frosty and the spicy chicken sandwich.
đ¤Łđđ Good for him!!