Wendy's facing backlash for experimenting with 'dynamic pricing' in their Fast-food Chain restaurants

[JohnS]

'Dynamic Pricing'. It's a term that you may not be familiar with, but basically it's what airlines do to their pricing during peak-holiday seasons and what Uber do when there is more demand for their services. That's right, they adjust their pricing and usually it's not better for the consumer. Wendy's have recently announced that they will introduce 'dynamic pricing' via their digital menus with them of making changes in 2025. Understandably, the reaction to this announcement has not been good. What do you think? Will Wendy's succeed with this move, or will they be forced to adjust their plans?

Opinion: The backlash against Wendy’s offers a lesson

Opinion by Jeff Yang - Updated 10:39 AM EST, Fri March 1, 2024

Wendy's said the digital menuboards would allow it to “offer discounts and value offers to our customers more easily, particularly in the slower times of day.” Charlie Neibergall/AP

 

CNN  — When Kirk Tanner, the CEO of Wendy’s — the fast food chain known for its sassy pig-tailed mascot and square beef patties — announced in its most recent earnings call that it was testing a new digital menu technology, it should have been a passing blip on Wall Street analysts’ radar. Instead, it sparked a burger-business media blaze that’s inflaming the socials two weeks later.

That’s because on Wednesday, sharp-eyed financial reporters noted that Tanner’s presentation included a reference to using the menus to introduce “dynamic pricing” — menu costs that would fluctuate during the day.

That’s a pricing strategy we’ve all come to know and despise in transportation, where express lanes have long featured “congestion” toll rates during the rush-hour crush and plane ticket prices skyrocket as demand soars around holidays.

The most enraging modern variant of this is the rideshare industry’s use of surge pricing, which automatically sends the cost of a pickup from services like Uber and Lyft soaring when the number of exhausted people trying to get home exceeds the number of frustrated drivers trying to meet frenzied demand.

This often means paying double or triple the usual tab during popular landing times (which is just the icing on your poop cake if you’ve just gotten off a hideously delayed Thanksgiving flight with your luggage headed to a different city entirely).

Tanner’s mention of dynamic pricing led observers to imagine the chain jacking up the cost of ice-cold Frostys on parched summer afternoons, or boosting Baconator bills during the lunch rush.

As backlash built, Wendy’s was forced to issue a statement, saying that the media had misconstrued the intent of its dynamic pricing plans as focused on raising prices during peak demand times. Instead, the chain maintained, the digital menuboards would allow it to “offer discounts and value offers to our customers more easily, particularly in the slower times of day.”

That may have soothed the masses a little. But the reality is that implementing “dynamic discounts,” as one might refer to them, instead of surge pricing, is simply another way for a business to engage in price discrimination — the economic term for charging different costs to people who have different demand profiles in order to extract maximum profit.

Yes, the stray customer who wants a Loaded Nacho Chicken Sandwich at 11 a.m. might benefit from a few cents off. But realistically, such dynamic discounts could just be used to soften the impact of future price increases.

And it’s easy to imagine how that might backfire, given how fluidly people can shift gears from chain to chain if they feel like they’re not getting their money’s worth. Discounts at odd hours might pull in some marginal customers, but not knowing how much of a hit your wallet might take when you’re craving a Dave’s Double adds a layer of unnecessary anxiety to a world that already frequently feels like it’s on the brink of the existential abyss, which could push away customers more generally.

(Then again, that could also be Wendy’s hidden bottom-line lifting strategy: making fast-food ordering so stressful that you end up snacking your feelings.)

After all, our consumer desire for cost certainty is a powerful force. It’s why pay-one-price, all-you-can-eat offerings are so popular (case in point, Red Lobster and its Ultimate Endless Shrimp, to the infinite carbo-load of Olive Garden’s Never-Ending Pasta Bowl, and the belly-up-to-the-bar bounty of buffets across America). In fact, fixed pricing is so alluring that more than a few restaurants have instituted Netflix-style fast food subscriptions — like Taco Bell’s $10 Taco Lover’s Pass and Panera’s $120-a-year unlimited bevvies membership.

If truth be told, however, the furor over dynamic pricing has probably been a little overblown. It’s the other half of Wendy’s new high-tech offerings that might end up as more of a head-shaker.

As Tanner said, its new menu will also allow it to experiment with “AI-enabled menu changes and suggestive selling.” A six-fingered, AI-generated Chance the Rapper in red pigtails tempting you with a seductive, voice-synthesized-and-customer-personalized add-on of Spicy Chicken Nuggets?

Talk about staring into the existential abyss.

Source: https://www.cnn.com/2024/03/01/opinions/wendys-menu-dynamic-pricing-yang/index.html

[VeguerosMAN]

Seems like Wendy's is digging their own grave. 

[Ford2112]

Crappy food should be cheap. It's why people eat it.

[VeguerosMAN]

6 hours ago, Ford2112 said:

Crappy food should be cheap. It's why people eat it.

Isn't Wendy's one upgrade from Macdonald's? 

[SCgarman]

18 minutes ago, VeguerosMAN said:

Isn't Wendy's one upgrade from Macdonald's? 

It's all garbage, period. If you quit eating all fast food like I did a few years ago, you will be surprised how much better your health/weight will be. Beware, fast food is like a drug addiction, weaning oneself off it completely takes a level of discipline some cannot muster.

[Chibearsv]

2 hours ago, SCgarman said:

It's all garbage, period. If you quit eating all fast food like I did a few years ago, you will be surprised how much better your health/weight will be. Beware, fast food is like a drug addiction, weaning oneself off it completely takes a level of discipline some cannot muster.

Same is probably true for cigars and alcohol. We all pick our poisons. 😜

[VeguerosMAN]

5 hours ago, SCgarman said:

It's all garbage, period. If you quit eating all fast food like I did a few years ago, you will be surprised how much better your health/weight will be. Beware, fast food is like a drug addiction, weaning oneself off it completely takes a level of discipline some cannot muster.

I was actually trying to be sarcastic there. 😀  I haven't had fast food in years. Cooking at home is the way to go.

[SCgarman]

1 hour ago, VeguerosMAN said:

I was actually trying to be sarcastic there. 😀  I haven't had fast food in years. Cooking at home is the way to go

Fast food has become so expensive, it is not much more expensive to just go to a decent sit down restaurant and get a nice healthy meal. I seen some places a Big Mac meal is $18.00? That is crazy.

[VeguerosMAN]

1 minute ago, SCgarman said:

Fast food has become so expensive, it is not much more expensive to just go to a decent sit down restaurant and get a nice healthy meal. I seen some places a Big Mac meal is $18.00? That is crazy.

I heard you need $50+ to dine at Five Guys now for two people

[rolaand]

It kind of makes sense if it is small fluctuations. Did they specify what the surge ranges would be?

[vinnyvega]

Thank goodness there are no In and Out burgers in New England. The best fast food burger out there. Makes Wendy's look like dog food.

[MrFolgers]

Don't give Habanos S.A. any more ideas...

[VeguerosMAN]

14 hours ago, vinnyvega said:

Thank goodness there are no In and Out burgers in New England. The best fast food burger out there. Makes Wendy's look like dog food.

We have Shake Shack instead on the east coast (too expensive as well).

[Ford2112]

I can go get bomb ass authentic Mexican street tacos for 8 bucks . 

[MrFolgers]

10 hours ago, Ford2112 said:

I can go get bomb ass authentic Mexican street tacos for 8 bucks . 

^ This is the answer!

[TacoSauce]

19 minutes ago, Ford2112 said:

I can go get bomb ass authentic Mexican street tacos for 8 bucks .

Does "bomb ass" describe the effect of said tacos on one's digestive tract? 

[Ford2112]

1 hour ago, TacoSauce said:

Does "bomb ass" describe the effect of said tacos on one's digestive tract? 

Yes

[BrightonCorgi]

Would make sense for many of their consumers if there were times of day where the menu was discounted to attract business. One of the Brazilian BBQ places around town discounts (food is per lb) like 15% for the last two hours open. I'd go there for the discount alone, but too late for us to eat dinner.

[Fuzz]

11 hours ago, BrightonCorgi said:

Would make sense for many of their consumers if there were times of day where the menu was discounted to attract business. One of the Brazilian BBQ places around town discounts (food is per lb) like 15% for the last two hours open. I'd go there for the discount alone, but too late for us to eat dinner.

Think of it as a really early breakfast.

[Cigar Surgeon]

Who could have possibly predicted that this hair brained scheme concocted by a CEO out of ideas to generate profit would have backfired so spectacularly. 🙄

I don't know how he'll manage to survive when he gets his multi-million dollar bonus on departure.

[VeguerosMAN]

Perhaps the CEO wants to get fired deliberately so that he could get the bonus on his way out. Smart move 😄

[SCgarman]

13 hours ago, BrightonCorgi said:

Would make sense for many of their consumers if there were times of day where the menu was discounted to attract business. One of the Brazilian BBQ places around town discounts (food is per lb) like 15% for the last two hours open. I'd go there for the discount alone, but too late for us to eat dinner.

I don't think this brainstorm is based on discounts. Wendy's is looking to rake in the revenue. During peak times, prices will increase. I wonder what ivory tower university this numbskulled CEO attended? Late founder Dave Thomas is likely rolling over in his grave. 

[BrightonCorgi]

Could be a short lived idea simply for free press. It's got people talking about Wendy's for very little investment.