Wendy’s, a popular fast food chain in the United States, is facing a significant backlash after announcing its plans to implement a dynamic pricing strategy on its menu items. This strategy, which involves raising and lowering prices based on demand, has already been adopted by ride-sharing companies and ticket sellers. While the concept may seem innovative, it has sparked controversy among customers and industry experts.
During a recent conference call, Wendy’s CEO Kirk Tanner revealed that the company would begin testing dynamic pricing, also known as surge pricing, as early as next year. He stated, “Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and daypart offerings along with AI-enabled menu changes and suggestive selling.” The goal is to leverage technology to optimize sales and profits across the entire Wendy’s system.
To support this initiative, Wendy’s plans to invest approximately $20 million in launching digital menu boards at all of its US company-run restaurants by the end of 2025. Additionally, the company will allocate around $10 million over the next two years to enhance digital menus globally. These investments demonstrate Wendy’s commitment to embracing technological advancements in the fast food industry.
Kirk Tanner, who recently assumed the role of CEO after a successful career at PepsiCo, succeeded Todd Penegor. Penegor had served as Wendy’s president and CEO since 2016. Under his leadership, Wendy’s underwent a restructuring process aimed at accelerating decision-making and expanding restaurant development, particularly overseas. Currently, Wendy’s and its franchisees operate approximately 7,000 restaurants worldwide.
Despite Wendy’s ambitious plans for dynamic pricing, the announcement has not been well-received by consumers and critics alike. The New York Post even featured the news on its front page, labeling it as “inflation’s next frontier.” This negative publicity caused Wendy’s stock to experience a slight decline in Tuesday morning trading.
Social media platforms have also become a battleground for disgruntled customers expressing their dissatisfaction with Wendy’s decision. On X, formerly known as Twitter, numerous users criticized the fast food chain, with some vowing to boycott the restaurant. One user stated, “Surge pricing works for Uber because they’re about the only choice. You’re not. Rest assured I won’t be returning to your restaurant… if this is something you move forward with.” Another user simply said, “Bye, Wendy’s. Predatory pricing isn’t an option for commodity fast food.”
The backlash against Wendy’s dynamic pricing strategy highlights the challenges faced by companies attempting to implement surge pricing outside of industries where it is already established. While the concept may be successful for ride-sharing services due to limited alternatives, the fast food industry operates in a highly competitive market. Customers have come to expect consistent pricing and may view dynamic pricing as a form of price gouging.
Wendy’s decision to explore dynamic pricing reflects the company’s commitment to technological innovation and maximizing profitability. However, it remains to be seen whether this strategy will resonate with customers or further damage the brand’s reputation. As the fast food giant prepares to embark on its digital transformation journey, it must carefully navigate the fine line between embracing change and meeting customer expectations. Only time will tell if Wendy’s can successfully implement dynamic pricing without alienating its loyal customer base.
