Wendy’s is looking to test having the prices of its menu items by having them fluctuate throughout the day based on demand, implementing a strategy that has already taken hold with ride-share companies, such as Uber and Lyft, and ticket sellers.
During a conference earlier in February, Wendy’s CEO Kirk Tanner said that the Dublin, Ohio-based burger chain will start testing dynamic pricing, also known as surge pricing, as early as next year.
Surge pricing is a time-based pricing strategy that companies use to increase or decrease prices for their services or items depending on the time of day and demand during that time of the day.
While initially compared in the media to the concept of “surge pricing” on the Uber app when prices rise as drivers are scarce, Wendy’s clarified how the company plans to use “dynamic pricing” in a statement on February 27.
“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” They added there are “no plans” to raise prices at high demand times.
Wendy’s Company plans to invest about $20 million to launch digital 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.
“These (digital) menu boards would give us more flexibility to change the display of featured items. This was misconstrued in some reports as an intent to raise prices when demand is highest at our restaurants. We have no plans to do that and would not raise prices when our customers are visiting us most,” the February 26 statement reads. “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.”
To support this, Wendy’s announced a restructuring intended to speed decision-making and invest more in new restaurant development, particularly overseas. The chain and its franchisees operate about 7,000 restaurants worldwide.
If Wendy’s new idea of surge pricing seems to work then this change may be adapted to more fast food restaurants such as Chick-fil-A and McDonalds as well.
