Wendys changes their tune on dynamic pricing following widespread blowback
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 Wendy’s 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 Wendy’s meal will fluctuate based on the product’s current demand, the time of day, and the store’s 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 “suggestive selling” based on factors like weather, for example. As you can imagine, people were *not* happy about the dynamic pricing idea. We found the beef, Wendy’s! 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 we’re 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 it’s 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
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