Financing

Wendy's now says it will not raise prices during busier periods

The fast-food burger chain walked back statements that it would test “dynamic pricing,” saying that digital menu boards would enable discounts during low-traffic parts of the day.
Wendy's
Wendy's is backing off its dynamic pricing test. | Image courtesy of Wendy's.

So much for Wendy’s dynamic pricing test.

The fast-food chain issued a statement late Tuesday, walking back earlier comments that it planned to test dynamic pricing and saying it had no intent on raising prices during busier times of day.

The company said it was simply discussing the potential of its investment in digital menu boards, which will give it more pricing flexibility. “This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants,” Wendy’s said. “We have no plans to do that and would not raise prices when our customers are visiting us most.”

Any test, the company said, would be of features “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 more easily, particularly in the slower times of day.”

The issue could be rooted over the term “dynamic pricing.” Last week, new Wendy’s CEO Kirk Tanner told analysts in prepared remarks about its digital menu board investment and used the term “dynamic pricing” to refer to the test the company plans next year.

“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,” Tanner said.

But the comment and some early stories about it largely went unnoticed, until the New York Post this week picked up on it and used another term for the practice, “surge pricing.” And in a comment to the Post, a Wendy’s spokesperson again used the term “dynamic pricing.”

“Dynamic pricing” typically means brands lower or increase prices based on time of day, and there are technology companies set up to do that sort of thing. It’s the same type of practice that airlines or hotels use, and one that rideshare companies have perfected.

Relatively few restaurants have done this in its purest form, though technology companies have been established to do this.

“Daypart offers” have been commonplace inside restaurants and bars almost from the day they first opened, with “early bird specials” and happy hours frequently using discounts to generate traffic during weak times of day. Those daypart offers are getting more popular with restaurants, thanks to loyalty programs and those digital menu boards.

The furor highlights the sensitivity of fast-food menu prices, which have increased faster than the rate of inflation for the past three years, even as grocery price inflation has slowed down over the past year. Wendy’s, McDonald’s and Jack in the Box have all said that they are getting less traffic from lower-income consumers, which McDonald’s said was due to grocery prices.

And it highlights the risks associated with true dynamic pricing strategies. Consumers are clearly frustrated by the variable prices in industries that use them. And they’re making their views known to fast-food concepts that might consider such an idea.

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