This American fast-food chain wants to use surge pricing for its burgers

The fast-food chain aims to roll out 'dynamic pricing model' experiment by 2025, which will be made possible by digital menus that can update prices in real-time

Wendy's, a popular global fast-food chain, may begin experimenting with a new surge pricing model similar to one used by Uber and Lyft, according to a US media report. Under this pricing model, prices of the menu items will fluctuate throughout the day based on demand, potentially leading to higher prices during peak hours.

CEO Kirk Tanner unveiled this bold initiative during a recent investor call, detailing plans to invest $20 million in menu boards capable of real-time price adjustments. The implementation of this technology aims to enhance sales and profitability across the board, with Tanner expressing optimism about its potential impact.

 

The new menu with "dynamic pricing" may be rolled out as early as 2025. However, the company has clarified that it will begin as a test.

A report by Gizmodo, one of the first to report on this news, cited a survey that showed that 52 per cent of consumers saw surge pricing or dynamic pricing akin to price gouging. Separately, 65 per cent of consumers stated that this would only make it more difficult to choose where to eat.

However, the specifics of how much prices could vary remain unclear, which has sparked concerns among consumers already grappling with inflationary pressures in the US. While a Wendy's spokesperson highlighted the benefits of dynamic pricing in staying competitive and attracting customers, critics have raised doubts about its fairness and transparency.

According to a report by the New York Post, industry experts have cautioned Wendy's about potential backlash from consumers, noting the risk of upsetting diners with fluctuating prices. Despite franchise owners emphasising the operational benefits of dynamic pricing, concerns persist about its impact on customer satisfaction and loyalty.

The same report also highlighted that Wendy's is the most expensive fast-food chain in the US as menu prices rose 35 per cent between 2022-23 due to inflation.

Despite inflation concerns, Wendy's reported a 15.2 per cent increase in net income at $204.4 million, and a 4.1 per cent rise in revenue at $2.18 billion at the end of 2023, compared to the previous year. Operating profit was up 8.1 per cent at $ 382 million compared to the previous year.

Additionally, Wendy's revenue forecasts five per cent growth on average during the next 3 years.