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Wendy’s plans to follow a new business model with Uber-style price-surging as soon as next year, according to Fox News Digital.
On 26 February, the outlet quoted a spokesperson from the fast food chain: “Beginning as early as 2025, we will begin testing a variety of enhanced features on these digital menu boards like dynamic pricing, different offerings in certain parts of the day, AI-enabled menu changes and suggestive selling based on factors such as weather.”
Additionally, the insider noted that this model would be one of a “number of features” tested by Wendy’s.
This statement comes after the CEO, Kirk Tanner, confessed the company’s future agenda during an earnings call.
“At Wendy’s, we’re focused on providing great tasting, fresh, high-quality food and doing it in a way that brings value to our customers. As we’ve previously shared, we are making a significant investment to accelerate our digital business,” the spokesperson noted. “In addition to evolving our loyalty program, we are leveraging technology even more with the rollout of digital menu boards in some US restaurants.”
The move toward dynamic pricing will furthermore “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”.
“We will test a number of features that we think will provide an enhanced customer and crew experience,” the spokesperson continued.
Dynamic pricing is the practice of product pricing based on several external factors like market demand. For example, if there is a high demand for a product, the price will be increased to match the demand. Prices are time-based and flexible depending on current conditions in the market.
Uber, the popular ride service, explained how their surge pricing works in a model featured on their website.
“There are times when so many people are requesting rides that there aren’t enough cars on the road to help take them all. Bad weather, rush hour, and special events, for instance, may cause unusually large numbers of people to want to request a ride with Uber all at the same time,” the service states. “In these cases of very high demand, prices may increase to help ensure that those who need a ride can get one. This system is called surge pricing, and it lets the Uber app continue to be a reliable choice.”
“Whenever rates are raised due to surge pricing, the Uber app lets riders know. Some riders will choose to pay, while some will choose to wait a few minutes to see if the rates go back down,” they continue.
Speaking to the Daily Mail about Wendy’s new surge-pricing initiative, George Washington University’s associate economics professor, Steven Suranovic, admitted the move could be risky for the restaurant franchise.
“They could shoot themselves in the foot by introducing something customers aren’t ready for,” he proclaimed.
Suranovic added: “Dynamic pricing enables them to take that surplus away from consumers and put it into the firm’s pocket. Ultimately, the biggest losers would be lunchtime customers. If people feel like they’re getting gouged, they’re not going to take kindly to this dynamic pricing strategy.”
Per Fox News Digital, Wendy’s will spend $20m. to put this new strategy into practice.
