Fast food inflation is a tangible reality, but the notion of Wendy’s introducing surge pricing next year, which implies adjusting food prices based on specific times of the day, as reported by various media sources, has been debunked by a company spokesperson. The confusion arose when Kirk Tanner, Wendy’s president and CEO, mentioned “dynamic pricing” during an earnings call on Feb. 15.
Tanner stated, “Starting in 2025, we will initiate trials of advanced features such as dynamic pricing and day-part offerings, in addition to AI-driven menu modifications and suggestive selling,” as per a publicly available call transcript.
For those unfamiliar with corporate restaurant jargon, “day-part offerings” involve promoting select items during designated times of the day. The controversy stemmed from the reference to dynamic pricing, which was misconstrued by many media outlets as surge pricing.
Distinguishing Surge Pricing from Dynamic Pricing
While both terms pertain to flexible pricing, they hold nuanced distinctions. Dynamic pricing typically involves price fluctuations based on demand, encompassing both increases and decreases. On the other hand, surge pricing specifically involves upward adjustments in prices.
Surge pricing is commonly observed in industries such as rideshare apps like Uber and Lyft, high-demand concert events, as well as hotel accommodations and airline tickets. However, its application in the fast-food sector is unprecedented.
Following the dissemination of the CEO’s comments, numerous news sources speculated that Wendy’s would adopt surge pricing instead of dynamic pricing, as originally mentioned by Tanner. Fast Company even reported, “Wendy’s wants to bring Uber-like surge pricing to your burgers.”
Subsequently, Wendy’s representatives clarified that surge pricing, characterized by price hikes during peak demand periods, was not what the CEO intended. Wendy’s Vice President Heidi Schauer affirmed in a statement to CNET, also published on Wendy’s website, “Wendy’s will not be implementing surge pricing. We did not use that term, nor do we have intentions to enforce such a practice.”
Despite this clarification, Wendy’s competitor Burger King took a light-hearted jab at the situation. “The only thing surging at BK is the 🔥,” the company quipped, using the fire emoji. “We do not believe in charging more when customers are hungry.”
Embracing Digital Menu Boards and AI Integration
Nevertheless, Wendy’s is forging ahead with technological advancements concerning pricing strategies. The statement highlighted investments in digital menu boards across its US locations to facilitate easier price adjustments, whether upward or downward.
The statement elaborated, “Digital menu boards could enable us to modify menu offerings at different times of the day and provide discounts and value propositions to our patrons more seamlessly, especially during slower periods.”
Moreover, artificial intelligence is set to play a pivotal role. During the earnings call, Tanner mentioned the deployment of “Wendy’s Fresh AI” in select restaurant outlets, noting continuous enhancements in operational speed and accuracy through AI utilization.
As reported by Food & Wine, Wendy’s will leverage AI to recommend menu alterations on the digital boards based on external factors like weather conditions. For instance, on a chilly day, promoting hot chili could be a strategic move.
While Wendy’s did not delve further into the specifics of its AI implementation, the company’s strides towards digital innovation and customer-centric strategies are evidently on the horizon.
