Wendy’s, the popular fast food chain, is set to revolutionize the industry with its introduction of surge pricing on its menu. Inspired by Uber’s dynamic pricing model, Wendy’s plans to test this new strategy in 2025. The move comes as part of a $20 million investment in digital menu boards that will allow the chain to adjust prices based on demand.
CEO Kirk Tanner revealed the company’s plans during an earnings call, stating that the new menus will enable Wendy’s to explore enhanced features such as dynamic pricing and day-part offerings. Additionally, the chain aims to incorporate AI-enabled menu changes and suggestive selling to further enhance the customer experience.
Tanner expressed optimism about the benefits of the digital menu boards, anticipating improvements in order accuracy, crew experience, and sales growth through upselling and consistent merchandising execution. The menus were initially showcased in a mockup of a redesigned Wendy’s restaurant in 2022, featuring new pick-up windows, a technologically advanced kitchen, and an updated interior. Some drive-thrus have already implemented the new menus, with TikTok users sharing videos of automated voice-powered displays that offer on-screen suggestions for add-ons.
While surge pricing is common in industries like sports and entertainment ticketing as well as ride-hailing apps, it has not been widely adopted by restaurants due to the labor-intensive process of changing menus. However, with the advent of apps and digital menus, fast food chains now have a more convenient way to implement dynamic pricing. Wendy’s expects its digital order sales to reach $2 billion this year and is investing $15 million to upgrade its app.
McDonald’s has also experimented with dynamic pricing and order-suggestion capabilities in some of its upgraded drive-thrus and on its app. However, the inconsistency in prices across franchises has recently sparked controversy over the affordability of its food.
Jonathan Maze, editor-in-chief of trade publication Restaurant Business, believes that surge pricing could be a turning point for the industry. He suggests that if Wendy’s successful implementation of the idea inspires other chains to follow suit, it could lead to a significant shift in the industry. However, Maze also acknowledges the potential risks associated with fluctuating prices in the fast food sector. He warns that raising prices during busy times could result in a backlash from consumers, emphasizing the need for careful navigation of this new strategy.
In conclusion, Wendy’s plans to introduce surge pricing on its menu, marking a significant development in the fast food industry. With the implementation of digital menu boards and AI-enabled features, the chain aims to enhance the customer experience and drive sales growth. While there are potential risks involved, Wendy’s bold move may inspire other chains to explore similar strategies, ultimately reshaping the way we perceive pricing in the fast food landscape.
