Wendy’s, the popular fast-food chain, is preparing to introduce a new pricing strategy similar to Uber’s surge-pricing by 2025, as revealed by a company representative after Wendy’s CEO Kirk Tanner made the announcement during a recent earnings call.
The spokesperson emphasized that the dynamic pricing approach, alongside other innovative features, will undergo testing as part of Wendy’s broader efforts to enhance customer experience and maximize value. The move aligns with Wendy’s substantial investment in accelerating its digital business, featuring digital menu boards in select US restaurants and an evolving loyalty program.
Dynamic pricing, a strategy involving price adjustments based on demand and external factors, aims to make Wendy’s competitive, flexible with pricing, and to motivate customer visits. The spokesperson stated, “We will test a number of features that we think will provide an enhanced customer and crew experience.”
Despite the positive outlook from Wendy’s, Steven Suranovic, an associate professor of economics at George Washington University, expressed concerns, suggesting that dynamic pricing might not align with customer expectations and could potentially lead to customer dissatisfaction.
Wendy’s $20M Dynamic Pricing
Wendy’s plans to invest $20 million in implementing the dynamic pricing model, alongside digital menu boards reflecting real-time price fluctuations. Recent data from consumer transparency platform PriceListo revealed that Wendy’s holds the title of the most expensive fast-food chain in the US, with menu costs rising by 35% due to inflation between 2022 and 2023.
In comparison, McDonald’s, Wendy’s rival, has faced criticism for its high-priced Big Mac combo, priced at nearly $18. The New York Post reported that low-income customers, earning less than $45,000 per year, have reduced orders from McDonald’s due to affordability concerns amid inflation. McDonald’s CEO, Chris Kempczinski, acknowledged the impact of inflation on consumer behavior, leading the company to promise a focus on affordability.
The introduction of dynamic pricing by Wendy’s raises questions about the potential consequences for consumers, with some experts cautioning that unexpected pricing fluctuations may not be well-received, particularly during times of economic uncertainty.
