Increase and decrease prices based on demand

Maybe you’re the type of person who enjoys eating Wendy’s Hot and Spicy Chicken Nuggets, and at $5.99 for ten pieces in Midtown Manhattan, this is a tempting dish.

Soon, you may have to check the time before you can satisfy that craving, as the fast food chain is changing the prices of crispy cuts of meat and other menu items based on demand.

The company plans to start testing dynamic pricing Starting in 2025, Wendy’s Chairman and CEO Kirk Tanner said on an earnings call in February.

In other words, prices for the Wendy’s Vanilla Frosty and other menu items will increase and decrease based on demand. The strategy will be displayed with digital menu boards where price changes will be reflectedS; The company plans to invest approximately $30 million in these initiatives.

“We are always focused on improving the customer and employee experience and to that end, we are leveraging technology even more in our restaurants,” Tanner said.

During the call, Tanner, who started as Wendy’s CEO last month after a long career at PepsiCo, didn’t provide many details about how much prices might rise or how exactly the dynamic pricing model would work.

anger among customers

Wendy’s customers expressed their outrage over the new strategy on social media, and some even called for a boycott. One customer jokingly commented that he planned to go for lunch at eleven in the morning or three in the afternoon.

The announcement came as US food inflation appears to be slowing after two years of rapid growth. The price of meals at home rose in January, but at a much slower pace, and restaurant chains and other food suppliers have indicated they are no longer raising prices as dramatically. Consumers’ negative reaction to price increases and companies’ arguments about lower spending on labor and packaging may partly explain the slowdown.

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dynamic pricing spreads

By adopting this pricing strategy, Wendy’s will join other companies that have introduced dynamic pricing, also known as demand pricing, which is often used to harass customers during periods of high demand. charge more for.

For example, Uber and Lyft charge more when demand exceeds the availability of cars on the road, such as during rush hour or inclement weather. Concert goers have also experienced dynamic pricing: for example, some fans of Bruce Springsteen found that tickets on Ticketmaster were priced at more than $5,500 when he decided to perform with his band after years of not doing so. Returned for.

Dynamic pricing has also been widely adopted in the world of commercial theatre, helping the recovery of institutions experiencing losses. However, variable pricing may disadvantage new attendees, as they are more likely to search for tickets to a show at the last minute when tickets become more expensive.

Many consumers have learned to pay attention to price changes. According to a January 2023 survey of 901 US consumers, 81 percent of consumers “always or often” check menu prices before choosing where to eat and half notice when restaurant prices change. Done by Captera, a company that connects companies with software providers.

According to Captera’s survey, about 52 percent of respondents believed that dynamic fees are price inflation.

As for Wendy’s, its dynamic pricing plan coupled with digital menu boards will help drive sales while improving order accuracy and the employee experience, Tanner said.

Wendy’s also plans to introduce changes to the menu that will be done by artificial intelligence. Tanner said the company announced in December that it was expanding the use of a platform called Fresh AI, which it incorporated into its drive-thru ordering experience to improve speed and accuracy.

Overall, Tanner said, the technology has helped employees “focus on what’s important, preparing fresh, high-quality Wendy’s favorites and building relationships with customers.”

c.2024 New York Times Company

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