Wendy’s Disavows ‘Surge Pricing,’ Clarifies Plans

Wendy’s Will Test Uber-esque ‘Surge Pricing’

With New Digital Menu Boards, Restaurants Can Quickly Alter Items’ Cost and Availability

Updated February 28, 2024

After news of Wendy’s plans to test “dynamic pricing” went viral on Tuesday, the fast-food chain alerted the media that it didn’t plan to employ “surge pricing,” the practice of increasing product costs during times of high demand. The Associated Press and USA Today received the clarification from Wendy’s via email on Wednesday. In the email, Wendy’s emphasized that its test “would be designed to benefit our customers and restaurant crew members” and not aimed at raising prices during rush periods.

Wendy’s CEO and President Kirk Tanner had announced the dynamic pricing tryout during an earnings call a few days ago. But the company’s follow-up email said the media had inaccurately interpreted “dynamic pricing” to mean “surge pricing.” 

No Surge Pricing, Wendy’s Insists

Wendy’s email unequivocally stated that “Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest. We didn’t use that phrase, nor do we plan to implement that practice.” 

The company’s email further said that its digital menu boards “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.”

$30 Million Investment

During the earnings call, Tanner said his company will invest about $20 million to “roll out digital menu boards to all U.S. company-operated restaurants by the end of 2025 and approximately $10 million over the next two years to support digital menu board enhancements for the global system,” NBC’s Today reported. 

He further stated that the digital menus will let Wendy’s test “more enhanced features like dynamic pricing and day-part offerings along with artificial intelligence-enabled menu changes and suggestive selling,” CNN reported. 

Echoing a portion of Wednesday’s email to The Associated Press and USA Today, he had added that the digital menu boards will benefit “order accuracy, improve crew experience and sales growth from upselling and consistent merchandising execution.” 

Improvements and AI Upselling

A spokesperson for the burger chain told Fox Business that 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.” 

That source also told Fox Business that Wendy’s AI-enabled upselling suggestions will be “based on factors such as weather.” During the earnings call, Tanner pointed out that Wendy’s already has introduced its “Wendy’s Fresh AI” – an artificial intelligence order-taking system – in many restaurants, “where we see ongoing improvement in speed and accuracy,” NBC’s Today reported.

Surge Pricing Isn’t New

Surge pricing already in fairly wide use. It’s common with ride-hailing apps such as Uber, the hospitality industry, and purchases of sports and concert tickets. Uber, for instance, charges more during rush hour and during bad weather. 

Hotels often raise prices for events such as sports championships and conventions. Online algorithms generate higher concert and sports event ticket prices when demand spikes. The prices on certain toll roads go up when drivers slow during heavy rush-hour traffic. 

Restaurants have largely taken a pass on surge pricing because changing menus is typically labor-intensive, CNN noted in its report. (McDonald’s has tried it in a limited way at its cutting-edge drive-through locations and via its app.) Apps and digital menus eliminate that drawback, and Wendy’s will spend $15 million to upgrade its app.

Warnings About Surge Pricing

In regard to “surge pricing” at restaurants (as opposed to the “dynamic pricing” plan that Wendy’s described Wednesday), Jonathan Maze, editor-in-chief of Restaurant Business, struck a cautionary chord. Surge pricing may well rile customers and “could lead to a backlash,” he told CNN. 

Caleb Silver, editor in chief of Investopedia, told Food & Wine that “Wendy’s foray into dynamic pricing is a bold experiment that could help the chain be more efficient and ultimately profitable if it works.” Also equating dynamic pricing to surge pricing, Silver warned that “it does run the risk of angering and losing customers since they actually have many choices, unlike the ride-share industry.” 

Other News from Wendy’s

In addition to revealing the dynamic pricing experiment, Tanner said the company will buy more $55 million in ads to promote its breakfast menu over the next few years. Wendy’s recently added two breakfast menu items, English muffin sandwiches and a breakfast burrito, and has partnered with Cinnabon for a new breakfast item. For a Leap Day giveaway on Feb. 29, customers could get a free Cinnabon pull-apart cup, made of buttery dough bites topped with cream cheese frosting, while supplies last. Also, according to Nation’s Restaurant News, the company is testing “saucy nuggets” with flavors like Buffalo, garlic-Parmesan, ghost pepper and honey barbecue at a few of its Ohio restaurants.

Previous ArticleNext Article
Mary Vinnedge is an award-winning journalist who has served as editor in chief, managing editor and senior editor at national and regional publications, including SUCCESS and Design NJ magazines. She also held reporting and editing roles at The Dallas Morning News and Charlotte Observer newspapers.

Before Mary began covering franchise news and trends as a staff writer for FranchiseWire and Franchise Consultant Magazine, she developed articles on topics ranging from lifestyle, education, health and science to home projects, horticulture, gardening, interior design and architecture. These articles included her reporting on academic news at her alma mater, Texas A&M University, when Mary worked in the marketing department of the Texas A&M Foundation. She continues to be a news junkie and subscribes to several publications.

Today Mary and her husband are empty nesters living on Galveston Island near Houston. The couple’s blended family – scattered around the United States – includes five children, four grandchildren and two very spoiled, very barky miniature schnauzer rescues.
Send this to a friend