Wendy's to introduce Uber-style 'Surge Pricing' on Burgers, prompting concerns

Wendy's, the popular fast-food chain, is set to experiment with an "Uber-style" surge-pricing model, where the prices of its menu items will fluctuate based on demand throughout the day.

As per a New York post report, CEO Kirk Tanner announced this move during a call with investors, revealing plans to invest $20 million in high-tech menu boards capable of real-time price updates.

The surge-pricing model aims to capitalise on peak hours, potentially increasing costs for already inflation-burdened consumers who may not have the flexibility to dine during off-peak times.

Wendy's, with over 6,000 locations nationwide, plans to roll out this pricing strategy next year, raising concerns about how it might impact consumer behaviour and satisfaction.

According to the New York Post, Tanner stated that as they persist in demonstrating the advantages of this technology in their company-operated restaurants, there should be a subsequent increase in franchisee interest in digital menu boards, further bolstering sales and profit growth across the system.

The $20 million investment will facilitate the installation of digital menu boards capable of dynamically adjusting prices without incurring additional overhead costs.

While Tanner did not provide specifics on potential price spikes or reductions during slower periods, Wendy's representatives highlighted the flexibility dynamic pricing offers, aiming to stay competitive and provide value to customers.

The fast-food giant plans to test various features to enhance the overall customer and crew experience.

Despite the potential benefits cited by Wendy's, concerns have been raised about the impact of dynamic pricing on consumers.

Ted Jenkin, CEO of wealth management firm oXYGen Financial, expressed scepticism, stating, "Guess people better change their lunch hours from 2 pm to 4 pm."

Industry experts warn that the ever-shifting prices may lead to backlash, with restaurant analyst Mark Kalinowski cautioning that some people view dynamic pricing as a rip-off.

Arlene Spiegel, a restaurant consultant, predicted that guests would be upset by unexpected price fluctuations.

Wendy's move comes as the restaurant industry explores dynamic pricing, inspired by the success witnessed in the airline, hotel, and transportation sectors.

Wendy's is currently the most expensive fast-food chain in the US, experiencing a 35 per cent increase in menu costs due to inflation between 2022 and 2023, according to data from consumer transparency platform PriceListo.

Franchise owners contend that scheduling and reducing the workload of kitchen personnel during peak hours are more important goals of dynamic pricing than maximising earnings.

As Wendy's prepares to test the surge-pricing model, competitors like McDonald's and Burger King are expected to closely monitor the experiment's impact on consumer behaviour and industry trends.