A new initiative from Wendy’s has government officials talking about an investigation and customers calling for boycotts, but there’s some question that the so-called “surge pricing” model that was provoking those reactions is even something the fast food chain has considered.
The practice — already in place at companies like Uber — would involve the chain charging more for the same menu items during peak times and less for them when things are slower.
The backlash started when news outlets like CBS News covered an earnings call in which Wendy’s CEO Kirk Tanner announced “dynamic pricing” tests starting next year.
“Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and daypart offerings, along with AI-enabled menu changes and suggestive selling,” Tanner said, according to the outlet.
“As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase, further supporting sales and profit growth across the system.”
The response on social media was immediate, though perhaps not always fully informed, such as the post to X below.
If people don’t boycott Wendy’s and their surge pricing model it will lead to higher pricing at all restaurants moving forward. It will change the restaurant industry for the worse and prices will never come down. #BoycottWendys
— Jeffrey Burrill (@burrill11) February 27, 2024
Then KDKA-TV’s money editor, Jon Delano, called the idea of changing prices “bait-and-switch,” and got a Pennsylvania state representative to agree with him.
Does this pricing model make you less likely to go to Wendy’s?
“Representative, do you think this is a form of bait and switch?” Delano asked Rob Matzie, who chairs the state House Consumer Protection Committee.
“Absolutely,” Matzie told him. “We need to make sure that definitions of surge pricing, if it’s not currently in the bait-and-switch legislation or law, then it’s something we need to look at potentially putting in, if necessary.”
KDKA added that “So far, Wendy’s says it’s just testing the concept,” but even that was overstating the case; the company’s CEO said the company would begin testing the concept perhaps in 10 months or so — or even later than that.
Wendy’s — which should perhaps have thought more about the language used to announce this test — clarified in an email Tuesday that the whole kerfuffle was much ado about nothing.
The whole idea was never to raise prices during peak hours, the company said, but to lower them during slower times in an attempt to drive up demand in the same way that some bars and restaurants will offer “happy hour” pricing to entice customers in during off-peak hours.
“We said these menuboards would give us more flexibility to change the display of featured items,” the company said in a Tuesday email. “This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants.
“We have no plans to do that and would not raise prices when our customers are visiting us most,” it added in fairly stringent terms.
If that wasn’t clear enough, a spokesperson told CBS News that the new digital menu boards would specifically be used to “change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.”
USA Today noted that the company had also announced a new breakfast menu item, the Cinnabon Pull-Apart. On Thursday, the company will offer a free Pull-Apart to any customer who requests one during breakfast hours, the outlet noted — while supplies last, of course.
