Wendy’s now says that it has no plans to increase prices during the busiest times at its restaurants.
Wendy’s now says it won’t start using surge pricing similar to Uber, Lyft
However, the fast-food chain confirmed it is spending $20 million on AI-powered menu boards.
The Minnesota Star Tribune
February 29, 2024 at 1:05AM
Chief Executive Kirk Tanner said earlier this month the burger chain would start testing dynamic pricing, similar to how Uber and Lyft change rates based on demand.
The company said Wednesday, after Tanner’s comments began to circulate widely this week, that any features it decides to test in the future “would be designed to benefit our customers and restaurant crew members.”
”Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest. We didn’t use that phrase, nor do we plan to implement that practice,” the company said in an email to the Associated Press on Wednesday.
However, during the company’s earnings conference call with investors and industry analysts, Tanner did say Wendy’s would “begin testing more enhanced features like dynamic pricing and daypart offerings, along with AI-enabled menu changes and suggestive selling.”
Tanner said the company is investing $20 million in AI-powered digital menu boards.
Wendy’s said in its statement that its upcoming digital menu boards “could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.”
The company plans to have the menu boards at all of its U.S. company-run restaurants by the end of 2025. It also plans to invest approximately $10 million over the next two years to support digital menu enhancements globally.
Reframing the pricing decision is wise, according to John Dinsmore, a marketing professor and pricing expert at Wright State University in Dayton, Ohio.
Surge pricing, led by ride-share apps and ticket marketplaces, could easily offend customers at restaurants, where consumers really feel the impact of inflation, he said.
Restaurants risk seeing customers flee to competitors if they try surge pricing. “If people want dinner at 6:30 and they pay more for it at that time, they will be offended,” Dinsmore said.
Neal Lefebvre, a product vice president at Delaget restaurant analytics company in St. Louis Park, doesn’t expect many restaurants to start upcharging at busy periods.
Wendy’s is the first he’s heard that openly discussed experimentation though there are rumors of similar efforts to come. Lefebvre predicts most chains will exercise caution.
“I don’t think in six months we’ll see prices all over the place depending on the time of day or other situations,” he said.
Wendy’s has 54 locations in Minnesota. The chain’s largest presence is in the Twin Cities, with five stores in Minneapolis and four in St. Paul.
This story includes material from the Associated Press.
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