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Why experts are worried about the new pricing method at Wendys
Experts are growing concerned over the future state of the fast food industry after Wendys announced it would be implementing dynamic pricing in 2025.�
Though business is clearly booming, with the industry expected to reach $1.5 billion by 2028, companies like McDonalds, Starbucks, and KFC are constantly envisioning new ways to add to their profits. Wendys is no different, as seen recently by a controversial move to implement a new pricing method.�
What is Wendys dynamic pricing?
In the middle of February, CEO and president of Wendys, Kirk Tanner, unveiled plans to invest $20 million in rolling out digital menu boards that would be better equipped for swapping around item prices.
Initially, media outlets compared the move to surge pricing, which companies like Uber often employ to increase prices when demand is highest. The process is practically unheard of in the food and drinks industry.�
A spokesperson for Wendys told NBC News: To clarify, Wendys will not implement surge pricing, which is the practice of raising prices when demand is highest. We didnt use that phrase, nor do we plan to implement that practice.
They added: Any features we may test in the future would be designed to benefit our customers and restaurant crew members. 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.
Dynamic pricing can allow Wendys to be competitive and flexible with pricing, motivate customers to visit, and provide them with the food they love at a great value, another spokesperson told The New York Post. We will test a number of features that we think will provide an enhanced customer and crew experience.
Why has it divided experts?
Though the new strategy is still in its early days, the plans have sparked some concern with experts who think it could drive business away from Wendys and set a dangerous precedent for other businesses.
Ted Jenkin, CEO of Atlanta-based wealth management firm oXYGen Financial, said that it could push customers into thinking too much better about their food choices. Naturally, they will pick the option that doesnt change their prices frequently.�
Guess people better change their lunch hours from 2 pm to 4 pm, he said. With all of the concern of rising prices, the last thing you want to have to consider is how much will it cost you for a burger and fries depending on the time of day.
He added: It will prey on the fact that people cant remember what the price was yesterday or the week before. It isnt a Taylor Swift concert. Its a burger, fries, and a Frosty.
Similarly, former Democratic candidate David Yankovich said on Twitter: So,�@Wendys isnt smart enough to understand their own market. Dynamic pricing is basically price gauging and consumers are fed up. Ill give it a year before this is remembered as one of the dumbest moves in fast food history.
In contrast, pricing consultant Matteo Locane argued that the move wont actually be that detrimental to Wendys bottom line.
He wrote: Picture this: you drive to your local restaurant, park, get in the queue and by the time you have reached the counter the price of your menu has gone up 15 cents. Are you really going to walk out and go somewhere else? Probably not youll take it on the chin and pay the little extra this time.
