Wendy’s is trying out dynamic pricing. It’s not as Uber as it sounds.
UPDATE: Feb. 28, 2024, 11:39 a.m. GMT. Wendy’s has since clarified in a statement to Mashable that it “will not implement surge pricing.” Rather, it may experiment with variable pricing strictly to lower prices when their restaurants are quieter.
“We have no plans to [raise prices when demand is highest] and would not raise prices when our customers are visiting us most,” Wendy’s wrote in a new blog post on Tuesday. “Digital menuboards 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.”
Original article follows.
Wendy’s will soon trial surge pricing. This is the world that capitalism has wrought.
Announced during Wendy’s Q4 2023 earnings call and first spotted by Nation’s Restaurant News, the fast food chain revealed it would begin testing “dynamic pricing” as early as next year. Like Uber’s surge pricing, this would cause the cost of Wendy’s menu items to fluctuate according to demand, growing more expensive when there are more customers in need of a feed.
So if you wanted to grab a Baconator for a midday treat, you may find yourself paying more than if you’d waited until after the lunchtime rush.
CEO Kirk Tanner said that Wendy’s intends to invest $ 20 million to install digital menu boards in all company-owned restaurants by the end of 2025, which will no doubt make it much easier to execute its surge pricing plans.
“We are always focused on improving the customer and crew experience, and in that spirit, we are leveraging technology in our restaurants even more,” said Tanner. “We expect our digital menu boards will drive immediate benefits to order accuracy, improve crew experience, and [prompt] sales growth from upselling and consistent merchandising execution.”
In addition to dynamic pricing, Tanner stated that Wendy’s will begin implementing different offers according to the time of day, with a particular focus on increasing breakfast sales. It will also trial “AI-enabled menu changes and suggestive selling,” with these changes expected to start rolling out next year.
It’s a bit like your waiter suggesting the perfect red to go with your steak, only instead of a rib eye and wine it’s a Loaded Nacho Chicken and Classic Chocolate Frosty, and instead of human waitstaff it’s a machine learning algorithm.
Personally, I find that part of the appeal of fast food franchises is that you know exactly what you’re getting. A Dave’s Double at your local Wendy’s should be exactly the same as one from the other side of the country, a rule which must also extend to its price. Fluctuating surge pricing flies in the face of this fast food law, removing the comforting certainty that you’ll be able to grab an affordable meal whenever you visit such an establishment.
Of course, rather than just bumping up prices when there’s a crowd, Wendy’s might strictly discount current prices during quiet moments in order to lure more customers in — a change few would object to.
In a statement to Mashable, Wendy’s said that its AI-enabled menu changes and suggestive selling tests would be “based on factors such as weather.”
“As we’ve previously shared, we are making a significant investment in technology to accelerate our digital business,” said Wendy’s. “Wendy’s has always been about providing high quality food at a great value to our customers and this recent investment will continue that by driving traffic and providing value during slower parts of the day.”
Tanner also provided a brief update on the rollout of Wendy’s AI chatbot. Revealed last May, Wendy’s FreshAI was created in partnership with Google Cloud, and aims to automate drive-through orders with voice recognition. The technology had been implemented in four Wendy’s restaurants across Columbus, Ohio as of December, with more planned.
According to the CEO, Wendy’s restaurants using FreshAI have seen “ongoing improvement in speed and accuracy.”
“This technology also plays a key role on our restaurant team, enabling the crew to focus on what matters: preparing fresh, high quality Wendy’s favourites and building customer relationships to bring them back time and again,” said Tanner. It’s unclear how said relationships will be built if diners won’t actually be speaking to workers anymore.