Wendy’s scrambles to ‘clarify’ plans for ‘dynamic pricing’ — claims it won’t raise menu prices during peak hours
Wendy’s said it wants to “clarify” its plans to roll out digital menu boards that can change prices for burgers and fries throughout the day — and insisted that Uber-style “surge pricing” isn’t part of the plan.
The burger giant’s CEO Kirk Tanner told analysts this month that new digital menu boards will enable the chain to enact “dynamic pricing” — the term Uber uses to describe its model that moves fares higher when demand spikes.
The new boards, slated to roll out next year, “should increase further supporting sales and profit growth across the system,” said Tanner, who rose to the chief role earlier this month.
But after reports of Tanner’s comments sparked an uproar this week, Wendy’s spokesperson Heidi Schauer sought to walk them back in a Wednesday statement to The Post.
“To clarify, 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,” she said.
Schauer added that there are “no plans to do that and would not raise prices when our customers are visiting us most.”
That’s after the chain earlier this week said in a statement that “Dynamic pricing can allow Wendy’s to be competitive and flexible with pricing, motivate customers to visit and provide them with the food they love at a great value.”
Asked pointedly on Monday about concerns that Wendy’s would jack up burger prices during peak lunch and dinner hours, the company had declined to comment specifically.
“We will test a number of features that we think will provide an enhanced customer and crew experience,” the company had responded. “We don’t have any additional information to share at this time.”
Before backpedaling on its so-called “dynamic pricing” model, reports that Wendy’s would implement ever-shifting prices sent shockwaves through the restaurant industry.
Industry experts were left scratching their heads about the double-talk
“A lot of people would say that dynamic pricing and surge pricing mean the same thing and 24 hours ago I would have said that, but Wendy’s says ‘no,’ restaurant analyst Mark Kalinowski told The Post on Wednesday.
“I would guess that Wendy’s didn’t expect anywhere near this attention.”
In a follow-up statement on Tuesday the company said, “Any features we may test in the future would be designed to benefit our customers and restaurant crew members. 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.”
But that would make Wendy’s an outlier in the restaurant industry.
“There aren’t that many restaurant brands that use dynamic pricing [only] for discounting,” Morningstar analyst Sean Dunlop told The Post.
At the same time, Wendy’s may have wanted to be seen as the first major restaurant chain to publicly embrace dynamic pricing because its digital sales growth is far below its competitors.
Wendy’s digital transactions account for just 14% of its sales compared to McDonald’s, which derives 40% of its sales from digital orders, according to Dunlop.
“You can understand why Wendy’s would want to be the first fast food chain to say it would use dynamic pricing,” Dunlop said. “But people are so confused because it’s a loaded phrase.”
The Post revealed this week that dozens of nationwide establishments — including barbecue chain Tony Roma’s — have already been reaping the benefits of surge pricing.
Here’s the latest on price increases at fast food restaurants
- ‘Out of control’ Five Guys prices ignite social media furor after $24 receipt for just burger, fries, small drink goes viral
- Wendy’s is selling $1 burgers after ‘dynamic pricing’ madness
- Panera Bread to launch cheaper sandwiches, abandon dinner in ‘largest menu transformation ever’
- Wendy’s planning Uber-style ‘surge pricing’ where burger prices fluctuate based on demand
Wendy’s also posted a news update to its website on Tuesday, which failed to mention any type of pricing model at all and instead focused on the company’s digital menu board investments.
Tanner told investors on the Feb. 15 conference call that the Ohio-based company would invest $20 million on high-tech menu boards that will be able to update prices in real-time without incurring additional overhead costs.
“As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase further supporting sales and profit growth across the system,” said Tanner, who rose to the chief role earlier this month.
Las Vegas-based casual eatery Rachel’s Kitchen, earned $64,000 in “additional annual profit across three stores,” according to data from Sauce Pricing, a startup backed by founding members of Sweetgreen, Uber, Airbnb, and several private equity firms.
Sauce pricing said in a blog post that restaurants “have the opportunity to increase item prices by 10% to 20% during the lunch rush so customers might pay an extra $1 to $2 for a $10 item.”
Still, experts in the field warned that Wendy’s should expect backlash, as many consumers “view dynamic pricing as a ripoff,” restaurant analyst Mark Kalinowski told The Post.
Restaurant consultant Arlene Spiegel added: “It won’t fly and guests will be very upset. You can’t surprise a guest with, ‘Your meal will cost another 50 cents or $1 today.’”
Wendy’s is already the most expensive fast-food chain in the US after menu costs rose 35% due to inflation between 2022 and 2023, according to data from consumer transparency platform PriceListo.
