Wendy’s is making headlines as it plans to roll out a new pricing model that is similar to Uber’s surge pricing. This pricing strategy, known as dynamic pricing, will see the fast food giant changing prices based on demand and other factors. While some see this move as a way for Wendy’s to stay competitive and flexible with pricing, others argue that it may lead to backlash from customers.
According to a spokesperson for Wendy’s, the company is expected to begin testing the new pricing model in 2025. This follows the announcement made by CEO Kirk Tanner during an earnings call earlier this month. The spokesperson also revealed that Wendy’s will be investing in other digital features such as AI-enabled menu changes and suggestive selling based on factors like weather. These enhancements are aimed at providing an enhanced customer and crew experience.
However, not everyone is on board with the idea of dynamic pricing. Some experts, like Associate Professor of Economics Steven Suranovic, believe that it could backfire for Wendy’s.
According to Suranovic, the fast food giant risks losing customers if they feel like they are being gouged. He also cautions that customers may not be ready for this type of pricing strategy. While Wendy’s may see an increase in profits, it could come at the cost of alienating their lunchtime customers.
Despite concerns and criticism, Wendy’s seems determined to move forward with dynamic pricing. In fact, the company is prepared to invest $20 million to implement this new pricing model, along with digital menu boards that reflect fluctuating prices in real-time. This is a significant investment and showcases Wendy’s commitment to staying competitive in the fast-food industry.
The conversation around pricing at fast food chains has been ongoing, with many consumers expressing frustration about rising menu costs. In particular, McDonald’s has faced heavy scrutiny for its Big Mac combo, which is priced at nearly $18. With inflation driving up grocery prices, customers making less than $45,000 a year have been forced to limit their fast-food purchases. In response to the backlash, McDonald’s CEO Chris Kempczinski promised to focus on affordability.
It’s clear that Wendy’s is not the only fast-food chain struggling with pricing in the face of inflation. All major players in the industry are feeling the effects and are having to make difficult decisions to stay afloat. While it remains to be seen how successful dynamic pricing will be for Wendy’s, it is clear that the company is taking a strategic approach to combat rising costs and remain competitive.
Despite concerns about the potential impact on customers, dynamic pricing is not a new concept in the business world. In fact, many other industries, such as transportation and hospitality, have been using this pricing strategy for years. For example, Uber’s surge pricing has been in place for a long time, and it has not deterred customers from using the service. This could be seen as a positive sign for Wendy’s as they move forward with their plans to implement dynamic pricing.
At this point, it is too early to predict how Wendy’s customers will react to the upcoming changes. However, it appears that the company is taking a calculated risk in the hopes of remaining relevant and profitable in a constantly evolving market.
As details about the new pricing model continue to emerge, it will be interesting to see how it will impact both Wendy’s and the fast-food industry as a whole.
