Wendy's to try "Dynamic Pricing"

[Patty Hann]

This is a verbatim cut-and-paste from CBS news:

Patrons of Wendy's may soon pay varying prices for their burgers, as the fast-food chain intends to bring Uber-like surge pricing to its menu.

"As early as 2025, we plan to test a number of features such as AI-enabled menu changes and suggestive selling based on factors, such as weather, that we think will provide great value and an improved customer and crew experience," a Wendy's spokesperson told CBS News in an email.

The strategy involves so-called dynamic pricing — also known as surge pricing — which has the cost of a product or service fluctuating based on factors like rush hour and whether it's raining.
Wendy's CEO Kirk Tanner told an earnings call earlier this month that Wendy's is investing $20 million to roll out digital menu boards to all U.S. company-operated restaurants by the end of 2025.

"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," he added. "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." (Emphasis--mine--added)

I don't eat fast food, Wendy's or anyone else's. But if I did it would end when this begins.
I wonder how customers will react to this.... should be interesting, even entertaining.

[Malcolm Schweizer]

So if we all stop eating at Wendy’s, the price will go down. Awesome.

[Earl McLain]

We don't eat out much at all, and fast food (which is no longer fast) is maybe two or three times a year. We stopped at a McD's last summer or early fall, and coincidently i went to a Wendy's Monday night (2-26). In both cases, looking at the menu board seemed confusing and foreign to me already. I just wanted a cheeseburger with no fries or drink...it was tough!!

The dynamic pricing in restaurants seems like it's been in place for a long time--i'm thinking of the "lunch menu" versus "dinner menu" at the places normally go to, prices have long been different (with larger portions at dinner). Been that way for a long time. Will be new to fast food, but that's a market i only use when i have to, so minimial impact on us. If we could get away from dynamic pricing at gas stations...i'd be happy--i only need gas when it's just gone up 30 cents/gallon!!

[Patty Hann]

It's not just "time-of-day" pricing... they are also going to price according to the weather.

As early as 2025, we plan to test a number of features such as AI-enabled menu changes and suggestive selling based on factors, such as weather.

Gives a new meaning to "Cloudy With a Chance of Meatballs" (or maybe if it's cloudy there is no chance you will be getting meatballs, at least not cheaply)

[glenn bradley]

I wonder how customers will react to this.... should be interesting, even entertaining.

Agreed. Consumers don't often realize the power they have to speak with their wallets. If we would all have cancelled our cable TV subscriptions for even one month the first time companies tried to charge us for service AND show us commercials, the entire cable TV market would have a different business model . . . well . . . at least in my imaginary reality anyway :).

P.s. I cancelled cable TV when they started showing commercials and haven't had it for longer than many adults have been alive. I seem to survive :D.

[Steve Eure]

Seems like another legalistic term for price for price gouging to me. I quit eating at McD's recently when I ordered a biscuit meal for breakfast and they charged me $9.87 for it. I was floored. Just 3 years ago, I would go there and buy the same meal several times a month for $3,58. That's almost a 300% increase. I wish my retirement was adjusted like that!

[Mel Fulks]

I don’t understand it and won’t try too. I do know how to cook a burger. Wendy is now in Never Never Land.

[Brian Elfert]

How is it providing any value to the customer with dynamic pricing? The only value would be if they lower the prices outside of peak hours as long the value pricing was lower than what they charge all the time today. There are a number of people who would either eat or late if they knew there was a substantial savings over eating during the peak period.

[Bill Dufour]

Taco Bell took out the registers so you had to use a computer terminal to place an order or do it on your phone. My wife and I could not get it to work so we left. They gave up on expanding to the other ones in town.
Bill D

[Edward Weber]

Nothing like taking a task as simple as ordering a burger and making it a total dumpster fire.
May they get what they deserve.

[Pat Germain]

Taco Bell took out the registers so you had to use a computer terminal to place an order or do it on your phone. My wife and I could not get it to work so we left. They gave up on expanding to the other ones in town.
Bill D

I had the same experience with the Taco Bell kiosks. I'm not a fan of the "Taco Hell", but Mrs. Pat likes it sometimes. I'm an IT guy and, the first time I tried to use the kiosk, I got nowhere. It just kept erroring out. Luckily, there was a young person behind the counter who could take my order. That person was busy because absolutely nobody could get any of those kiosks to work. I went back a second time months later. Same story. Why were those stupid kiosks even powered on? They served as a time-waster and nothing more.

Now Mrs. Pat goes to Taco Hell herself and uses the drive-through.

I'm not sure I believe this Wendy's pricing thing. I'm wondering if it's leading up to a big and stupid April Fool's joke.

UPDATE: Well, it's not an April Fool's joke. But Wendy's is backtracking big time. Not sure if it waw misunderstanding or if overwhelming, online outrage convinced them otherwise:

""To clarify, Wendy's will not implement surge pricing, which is the practice of raising prices when demand is highest," Wendy's Vice President Heidi Schauer said in an email to NPR. "We didn't use that phrase, nor do we plan to implement that practice."

https://www.npr.org/2024/02/28/1234412431/wendys-dynamic-surge-pricing#:~:text=%22To%20clarify%2C%20Wendy's%20wil l%20not,plan%20to%20implement%20that%20practice.%2 2

[Doug Garson]

So did CBS news get it wrong? Because their report used the words "so-called dynamic pricing — also known as surge pricing" per the OP. Maybe they will offer discount pricing when traffic is low to try and attract more business but if no one knows when the discounts are in effect they will be mmmm ineffective. :cool: Better to just advertise discount prices when historically traffic is low and donate the $20 million in products to local foodbanks and get the benefits of the goodwill.

[Jim Koepke]

Taco Bell took out the registers so you had to use a computer terminal to place an order or do it on your phone.

This is why I haven't been to Taco Bell since they started this fiasco. It took me what seemed like forever just to get a soft drink. The guy next to me spent even longer ordering breakfast only to be told it was too late to order from the breakfast menu, even though the kiosk let him. Candy just about had a melt down trying to order what she wanted at another time. That was the last straw. We order out to relax, not to have a fit.

One thing the bean counters who come up with these ideas will learn about surge pricing is people will stop eating in their establishments during the times when they are normally the busiest. It won't do a lot to increase earnings unless they do lower prices during the off hours to bring in more business.

What might serve them better is to select the best selling items on their menu to run a "surge special" on an abridged menu to speed up the customer through put during heavy business hours.

jtk

[Brian Runau]

Another reason to not eat fast food. Brian

[Barry McFadden]

Just read today that the CEO of Wendy's says the Surge pricing is not going to happen.

[Pat Germain]

So did CBS news get it wrong? Because their report used the words "so-called dynamic pricing — also known as surge pricing" per the OP. Maybe they will offer discount pricing when traffic is low to try and attract more business but if no one knows when the discounts are in effect they will be mmmm ineffective. :cool: Better to just advertise discount prices when historically traffic is low and donate the $20 million in products to local foodbanks and get the benefits of the goodwill.

It wasn't just CBS. A lot of news outlets reported the same thing. What is still up in the air is if the CEO's comments weren't clear or if Wendy's simply panicked and backtracked based on extreme, negative reaction from the public.

[Steve Wurster]

Dynamic pricing isn't new. It's standard practice for airline tickets, hotel prices, lots of retail things, and of course rideshare companies (Uber, Lyft). This might just be the first time it's been talked about for food. That being said, this take on it is hilarious:
516180

[andrew whicker]

So did CBS news get it wrong? Because their report used the words "so-called dynamic pricing — also known as surge pricing" per the OP. Maybe they will offer discount pricing when traffic is low to try and attract more business but if no one knows when the discounts are in effect they will be mmmm ineffective. :cool: Better to just advertise discount prices when historically traffic is low and donate the $20 million in products to local foodbanks and get the benefits of the goodwill.



I'm thinking the same thing. If the nominal price is the max price okay. Makes sense. However the customers will need an app to keep track or maybe Google maps.

But let's be honest, who trusts any mega corp? This will be another way to sneakily increase prices for them. They can then use the extra profit margin to lobby against workers and taxes.

Very American version of win win.

[Derek Meyer]

There is an article on Ars Technica today about Wendy's pricing plans. They clarified that they do NOT plan on raising prices during peak hours.

https://arstechnica.com/information-technology/2024/02/wendys-plans-ai-powered-menu-to-change-food-prices-based-on-demand-weather/

Time of day price variation is common at lots of eateries. Think happy hour or late night discounts. It sounds to me like Wendy's is trying to take it to the next level to make these adjustments based on other factors. Weather could easily affect foot traffic in their stores, so lowering prices during bad weather would be a way to entice more customers to visit during those times.

Derek

[roger wiegand]

Added motivation to not eat in fast food joints sounds like a real win for consumers, both from a financial and health point of view. We quit about 25 years ago, haven't missed it a bit. Eat much more delicious food now, and saved a small fortune in the process.

[Stan Calow]

I dont think it's an inherently evil or greedy thing to suggest. Let the marketplace decide.

[Doug Garson]

It wasn't just CBS. A lot of news outlets reported the same thing. What is still up in the air is if the CEO's comments weren't clear or if Wendy's simply panicked and backtracked based on extreme, negative reaction from the public.
I pick door number 2, panicked when they saw the negative public reaction.

[Edward Weber]

Most places that use this tactic/marketing strategy, don't announce it ahead of time.
Better to find out now and avoid all the backlash

[Steve Demuth]

Most places that use this tactic/marketing strategy, don't announce it ahead of time.
Better to find out now and avoid all the backlash

I think it's a particularly tough thing to implement in a place like a fast food counter - from day one, you're going to have people standing in line when the price on the board changes, and that's NOT going to go over well. Can imagine being the counter manager?

On the other hand, we're probably not far from fully automated fast food joints becoming the norm, where there will be no body to complain to - only person in the joint will be behind closed doors managing and maintaining the machines.

[Steve Demuth]

I had the same experience with the Taco Bell kiosks. I'm not a fan of the "Taco Hell", but Mrs. Pat likes it sometimes. I'm an IT guy and, the first time I tried to use the kiosk, I got nowhere. It just kept erroring out. Luckily, there was a young person behind the counter who could take my order. That person was busy because absolutely nobody could get any of those kiosks to work. I went back a second time months later. Same story. Why were those stupid kiosks even powered on? They served as a time-waster and nothing more.

We spent millions at the clinic where I last worked installing self check in kiosks at every desk. The theory is that patients will have their clinic app on their smart phone with their itinerary on it, and can check in at each desk as they go through the lab, radiology, various specialties, for each appointment without nurses help. Lots and lots of patients struggled with the kiosk check in.

I would put that down to the fact that patients tend to be old people and sick people with things other than kiosks and smart phones on their mind, but then I had to help my wife through the whole rigamarole, as she was diagnosed and treated for leukemia. I was the Chief Technology Officer for the whole hospital / clinic system, and the damned things defeated me more than once.

In the end, at one department after another, the clinic had to move one of the nurses from behind the check-in desk to a mini-desk beside the kiosk, to check patients in, because the kiosks defeated so many of us. I think after some years, it now actually yields some efficiency and patient satisfaction improvement, but it was a struggle.

[Bruce Page]

We spent millions at the clinic where I last worked installing self check in kiosks at every desk. The theory is that patients will have their clinic app on their smart phone with their itinerary on it, and can check in at each desk as they go through the lab, radiology, various specialties, for each appointment without nurses help. Lots and lots of patients struggled with the kiosk check in.

I would put that down to the fact that patients tend to be old people and sick people with things other than kiosks and smart phones on their mind, but then I had to help my wife through the whole rigamarole, as she was diagnosed and treated for leukemia. I was the Chief Technology Officer for the whole hospital / clinic system, and the damned things defeated me more than once.

In the end, at one department after another, the clinic had to move one of the nurses from behind the check-in desk to a mini-desk beside the kiosk, to check patients in, because the kiosks defeated so many of us. I think after some years, it now actually yields some efficiency and patient satisfaction improvement, but it was a struggle.

The medical complex I go to has 8-10 self-check-in kiosks. At the far end of them is a warm body. That’s where I check in.

[Sam Force]

Our local Steak n Shakes have all went to using kiosks for ordering. Instead of a restaurant full of customers and probably 12-15 employees they now have maybe 6 customers and 3-4 employees. We use to go at least once a week, some weeks twice. Now not at all, keep wondering when they will go back to the old way of business or close the door. They had hired local high school employees for years, now just a couple cooks and a "assistant manager" sad to see the chain of restaurants close as they cannot keep going at this pace

[Keith Westfall]

They must have thought there was a buck or two it, 20 million investment is not a small thing. If they can invest that much and still make money, I'm probably not getting any kind of a deal....

Can't remember the last time I ate at Wendy's, and won't now for sure.

Last time I went to MD, the food tasted terrible. Wasn't sure if t was the food or my body rejecting it, as I don't eat at any of them anymore...

[Monte Milanuk]

Local corner convenience store recently went through and removed all the prices on individual items - soda, candy bars, chips, whatever. You only get the total price when they ring you up at the counter.

Haven't been back since.

[Rich Engelhardt]

I pick door number 2, panicked when they saw the negative public reaction.
I'll pick door number three.
I'm thinking this came as a surprise to the franchisees

The OP article said:
""As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase""

[Rob Luter]

I need to float this idea to my employer. The busier I am, the higher my compensation should be. I'm sure that will work out just swell.

[Stan Calow]

A friend of mine pointed out that if Wendy's just raised prices across the board, those people who paid close attention might notice and grumble, but it wouldn't cause outrage. With a good chunk of their business being through the drive-thru, most people wont notice (or get out of line) if the prices change at certain times. It would be interesting to know the intent behind the proposal - to even out peak usage periods, like our electricity provider is doing? Or to cover higher personnel costs for peak times? They're a business, and their purpose is to make maximum money for their stockholders - that's the basis of capitalism.

[Dave Fritz]

https://www.npr.org/2024/02/28/1234412431/wendys-dynamic-surge-pricing Not sure what they're up to.

[Curt Harms]

It wasn't just CBS. A lot of news outlets reported the same thing. What is still up in the air is if the CEO's comments weren't clear or if Wendy's simply panicked and backtracked based on extreme, negative reaction from the public.

This seems most likely and they weren't talking about implementing it until 2025 so plenty of time to reconsider. It didn't take anywhere near that long, sounds like.

[Bill Dufour]

Dynamic pricing is a code word for our cashiers make lots of mistakes. No sir I did not make a mistake, that hamburger is 539 dollars not the 5.39 on the menu board. Must be dynamic pricing. Would you like some ketchup with that?
Bill D.

https://www.snopes.com/fact-check/the-salami-technique/

[Alex Zeller]

It doesn't bother me a bit. We all know prices are going up. You can't raise wages as fast as they have been and not expect it. You can't have crazy inflation like we've seen over the last couple years not impact prices. I would rather have prices go up when during peak hours and not as much when they aren't busy. Either people will adjust their habits on when they eat (if they can), accept the higher prices, or (not very likely) not eat at that establishment. They are already doing it when they offer deals for using their app to order. What do you think coupons are for?

[Brian Elfert]

I would assume the coupon doesn't limit what hours the coupon can be used. I further assume the app discounts are good at all hours too, but it would be easy to limit the hours for discounts on the app.

[Brian Elfert]

It makes sense for a fast food restaurant to want to spread out sales so they aren't slammed for 60 to 90 minutes and then slow the rest of the night. A better way to deal with this would be to raise prices by 10% across the board and then offer a 10% to 15% discount for orders outside of the busy times. Maybe a 15% discount if you order before 5 pm or after 7 pm. People will stay away in droves if you essentially make it a penalty to eat during the two busy hours, but you'll attract a lot of customers if there is a discount outside of busy hours.

[Rick Potter]

I have to plug in during off hours, and now they want me to eat off hours too? I think they were very wise to drop it before it became a liability.

[Brian Elfert]

Nobody was going to make anyone eat at off hours. It was just going to be more expensive at peak times.

[Lee DeRaud]

P.s. I cancelled cable TV when they started showing commercials and haven't had it for longer than many adults have been alive. I seem to survive :D.
Ok, I'll bite: when did cable TV not have commercials?!? (Leaving aside premium channels like HBO etc.)

[Lee DeRaud]

Dynamic pricing is a code word for our cashiers make lots of mistakes. No sir I did not make a mistake, that hamburger is 539 dollars not the 5.39 on the menu board. Must be dynamic pricing. Would you like some ketchup with that?

It's been decades since I've been in a fast-food place where a cashier actually enters the price.
They just punch the button with the name/picture of the item on it.

[Keith Outten]

Ok, I'll bite: when did cable TV not have commercials?!? (Leaving aside premium channels like HBO etc.)

When COX cable in our area started offering cable TV there were no commercials on any channel.

[mike stenson]

When COX cable in our area started offering cable TV there were no commercials on any channel.

That must have been before the 80s. So, fifty years ago?

[Lee DeRaud]

When COX cable in our area started offering cable TV there were no commercials on any channel.
Not quite sure I want to know how that worked. Seems like it would screw up the scheduling rather badly, as in "We'll watch 'Jeopardy' on ABC and switch over to CBS for 'Law&Order' at, um, whenever...". And I assume everything was delayed several hours so they could remove ads from the network feeds.

There are also the economics to deal with, as I assume the content providers still needed to get paid. At least there were a lot less of them back in the day.

[Brian Elfert]

Not quite sure I want to know how that worked. Seems like it would screw up the scheduling rather badly, as in "We'll watch 'Jeopardy' on ABC and switch over to CBS for 'Law&Order' at, um, whenever...". And I assume everything was delayed several hours so they could remove ads from the network feeds.


My parents got basic cable in 1991. This included just the broadcast stations plus QVC and the like. The broadcast stations still had commercials. I think when people say cable originally had no commercials they are talking about cable specific networks, not broadcast networks.

[Dave Zellers]

That was how cable was marketed in the earliest days- no commercials.

Edit- yes to Brian's post above

[Bill Howatt]

...

There are also the economics to deal with, as I assume the content providers still needed to get paid. At least there were a lot less of them back in the day.
Don't know what the deal is now and if it varies by region, haven't heard it for a while but it was not uncommon to hear, "the providers don't pass on (much?) money to the TV stations they carry".

[Kent A Bathurst]

Dynamic pricing works very well on Atlanta expressways. Dedicated lanes. In general, charge changes wih congestion - the site says it is set using a "proprietary scientific algorithm", and gives a list of factors that are "included" in the calculation.

My recollection is that the pricing adjusts to target a minimum 60mph in the express lanes. Rush hour traffic backups can make a 20 minute trip last 2 hours, while the toll lanes zip right along.

My strategy is different - live in the city. Nearby things are always near by. Otherwise drive out while everyone else is driving in. And vice versa.

[Dave Zellers]

Plus back in the 70's it was the only option for very rural areas.

[Brian Elfert]

Don't know what the deal is now and if it varies by region, haven't heard it for a while but it was not uncommon to hear, "the providers don't pass on (much?) money to the TV stations they carry".

I pay $25.30 per month on my cable bill for broadcast networks. It seems crazy that I can watch broadcast TV for free with an antenna, but it costs me $25.30 for broadcast TV just because I have cable. I'm considering changes to my TV subscriptions including booting cable, but I haven't done it yet.

[Lee DeRaud]

Plus back in the 70's it was the only option for very rural areas.
I recall even earlier (mid-'60s?) visiting relatives in a rural area. Their TV was "cable", but it was effectively just a boosted feed over coax from an antenna 10-15 miles away, same 3-4 broadcast channels we got in the city.