Wendy's Walks Back 'Surge Pricing' Report After CEO Comments

Fast  food giant Wendy's has refuted reports that they're going to use 'surge pricing' - the practice of raising prices when demand is the highest, after comments by CEO Kirk Tanner, who told market analysts earlier this month that the company would use "dynamic pricing" as part of a $20 million investment in digital menu boards for all restaurants, which will be in operation by the end of 2025.

wendys walks back surge pricing report after ceo comments

"Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest," a company spokesperson told Fox News Digital. "We didn’t use that phrase, nor do we plan to implement that practice."

On Tuesday, the company issued a statement following backlash against 'surge pricing.'

"We didn’t use that phrase, nor do we plan to implement that practice," the company said. "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."

"Any features we may test in the future would be designed to benefit our customers and restaurant crew members," the statement continues. "Digital menuboards could allow us 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."

According to Tanner, however, the digital menu boards will help improve staff experiences, increase sales, and help with order accuracy, and utilize dynamic pricing which will leverage "Wendy’s Fresh AI" enabled menu changes that will take into consideration factors such as the weather.

"Dynamic pricing can allow Wendy’s to be competitive and flexible with pricing, motivate customers to visit, and provide them with the food they love at a great value. We will test a number of features that we think will provide an enhanced customer and crew experience," said the spokesperson.

That said, Investopedia defines dynamic pricing as a strategy by which "companies set flexible prices for their products or services that change, according to current market demand."

"Businesses are able to change prices based on algorithms that take into account competitor pricing, supply, and demand, and other external factors in the market," the entry continues. "Dynamic pricing is a common practice in several industries such as hospitality, travel, entertainment, retail, electricity, and public transport."

So the confusion lies over whether "dynamic pricing" and "surge pricing" are actually different terms - which Wendy's claims is the case.

As the Epoch Times notes further, Sen. Elizabeth Warren (D-Massachusetts) criticized the company, calling surge pricing “pricing gouging.”

“@Wendys is planning to try out ‘surge pricing’—that means you could pay more for your lunch, even if the cost to Wendy’s stays exactly the same,” the senator posted on X.  “It’s price gouging plain and simple, and American families have had enough.”

Jim Sargent, a local resident of Wendy’s test city of Portsmouth, told WMUR Manchester (New Hampshire) that he would still go to the fast food outlet if they had started surge pricing, but that he thinks it’s an odd model.

I don’t think it’s an idea that’s probably going to succeed,” he said.

Donald Kreis with the New Hampshire Office of the Consumer Advocate explained the logic behind surge pricing to WMUR Manchester.

When everybody wants to eat hamburgers at exactly the same time, it leads to very inefficient use of the available resources, so if you raise the price in times of high demand, then that encourages people to maybe eat a hamburger at a slightly different time, maybe a little earlier, maybe a little later,” he said, adding that this would help staff better manage demand.

Authored by Tyler Durden via ZeroHedge February 29th 2024