Wendy’s announced it will launch new menu prices that will fluctuate depending on the time of day.
The country’s second-largest burger chain, which has 6,000 restaurant locations, said the change will begin next year.
Signage is displayed outside a Wendys Co. restaurant in El Sobrante, Calif., May 6, 2020.
David Paul Morris/Bloomberg via Getty Images, FILE
Customers could pay $1 more for a sandwich like the Baconator during the lunch rush, for example.
“Historically, companies just set one price that was constant across time. Pricing algorithms allow companies to change prices throughout the day or perhaps even throughout an hour,” Zach Brown, a professor of economics at the University of Michigan, told “Good Morning America.”
Wendy’s CEO Kirk Tanner said the company will spend $20 million on high-tech digital menu boards that can update prices in real time, similar to surge pricing strategies adopted by rideshare companies like Uber and Lyft, airlines and hotels.
“During the busy times, they can obviously increase profits then,” Brown said. “And also, some consumers will want to shift to the less busy times when demand is lower and prices are lower.”
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Wendy’s is already receiving a frosty reaction to the price change announcement with one user on X, formerly known as Twitter, writing, “Surge pricing is just Price Gouging by any other name.”
Wendy’s told ABC News in a statement that its dynamic menu pricing can “be competitive and flexible with pricing, motivate customers to visit and provide them with the food they love at a great value. We will test a number of features that we think will provide an enhanced customer and crew experience.”
Some experts say customers could see more menu pricing changes ahead at other fast food chains, including McDonald’s and Burger King, especially if Wendy’s sees a boost in its bottom line after implementing dynamic pricing.
Wendy’s, the popular fast-food chain known for its square burgers and frosty desserts, is shaking up the industry with a new surge pricing model similar to that of ride-sharing giant Uber. The move comes as part of Wendy’s efforts to adapt to changing consumer preferences and stay ahead of the competition in the ever-evolving fast-food landscape.
Surge pricing, also known as dynamic pricing, is a strategy used by companies to adjust prices based on demand. This means that during peak times, such as lunch or dinner rush hours, prices may increase to reflect the higher demand for their products. Conversely, during slower times, prices may decrease to entice more customers to make a purchase.
Wendy’s decision to implement surge pricing is a bold move that has sparked both excitement and skepticism among consumers. Some see it as a way for the company to maximize profits and better manage customer flow, while others worry that it may lead to higher prices and less predictability when it comes to their favorite menu items.
One of the key benefits of surge pricing for Wendy’s is the potential to increase revenue during peak hours. By adjusting prices based on demand, the company can capture more value from customers who are willing to pay a premium for their food during busy times. This can help offset the costs of operating during off-peak hours when sales may be slower.
Additionally, surge pricing can help Wendy’s better manage customer flow and reduce wait times. By incentivizing customers to visit during slower times with lower prices, the company can spread out demand more evenly throughout the day, leading to a more efficient and enjoyable dining experience for everyone.
However, there are also potential drawbacks to surge pricing that Wendy’s will need to navigate carefully. Customers may be put off by sudden price increases, especially if they feel like they are being taken advantage of during busy times. Additionally, there is a risk of backlash if customers perceive the pricing strategy as unfair or exploitative.
Overall, Wendy’s introduction of surge pricing is a bold move that reflects the company’s commitment to innovation and adapting to changing consumer preferences. It will be interesting to see how customers respond to this new pricing model and whether it ultimately helps Wendy’s achieve its goals of increasing revenue and improving customer satisfaction.
