Wendy’s, the popular fast-food chain, is set to introduce a surge pricing menu that will change the prices of certain menu items based on demand. This move comes as more businesses are utilizing technological advancements to tap into real-time trends and adjust prices accordingly. While surge pricing is not a new concept, it is becoming increasingly common in various industries.
The CEO of Wendy’s, Kirk Tanner, announced during a conference call that the company would begin experimenting with dynamic 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 show the benefits of this technology in their company-operated restaurants and increase franchisee interest in digital menu boards, ultimately driving sales and profit growth.
The response to this announcement on social media has been mixed. Some consumers expressed their dissatisfaction, with one person commenting, “If I ate at Wendy’s, I’d sit in the drive-thru waiting for the surge pricing period to end.” However, others defended Wendy’s decision, noting that many businesses already adjust prices based on demand.
The days of fixed prices may soon be behind us, as research and advisory firm Gartner predicts that by 2025, the top 10 global retailers will utilize dynamic pricing. Online retailers like Amazon already use algorithms and artificial intelligence to adjust prices based on competitors and individual shoppers’ interests. Additionally, coupons and offers are frequently used in mobile apps to incentivize purchases.
Despite the implementation of surge pricing, experts believe that Wendy’s fans will only experience moderate price swings during periods of peak demand. Timothy Webb, an assistant professor at the University of Delaware, explains that the fast-food industry is highly competitive, and drastic price increases could drive customers to other options like Burger King. He expects that there will be small price changes rather than significant ones.
While consumers have become accustomed to hotels and airlines adjusting prices based on demand, they tend to view sharp price increases as predatory. According to a survey by software company Capterra, 52% of consumers consider dynamic pricing in restaurants to be equivalent to price gouging. This sentiment is echoed by John Dinsmore, a marketing professor at Wright State University, who states that consumers resent companies that appear to exploit them in moments of need.
Dinsmore cites Coca-Cola as an example of a company that faced backlash for dynamic pricing. In the early 2000s, Coca-Cola experimented with vending machines that raised the cost of drinks based on the outside temperature. Consumers felt exploited and believed it violated their sense of price fairness. Dinsmore predicts a similar response to Wendy’s dynamic pricing.
Despite potential consumer backlash, dynamic pricing aims to influence consumer behavior. Price-sensitive consumers may be able to find deals and pricing that benefit them. Webb suggests that individuals looking to save a few dollars could take advantage of lower prices during certain times of the day.
However, experts argue that dynamic pricing may not work in all aspects of American life. Dinsmore believes it will only be effective in certain contexts, such as Uber, where they are often the only option. For consumer staples like food and clothing, he finds it challenging to see surge pricing taking hold due to the abundance of options available. Consumers will likely adjust, and competitors may undercut prices.
In conclusion, Wendy’s decision to introduce surge pricing reflects a growing trend among businesses to utilize real-time data and adjust prices accordingly. While some consumers express dissatisfaction with this approach, others recognize that many businesses already employ similar strategies. As dynamic pricing becomes more prevalent, it remains to be seen how consumers will respond and whether it will be successful in the long run.