Maybe you’re the type of person who loves biting into Wendy’s warm, spicy chicken nuggets. Priced at $5.99 for a pack of 10 in Midtown Manhattan, it’s an irresistible treat.
You may want to consider how long it will take to satisfy such desires in the near future. At fast-food chains, prices for crispy chunks of meat and other items change depending on the time of day.
Wendy’s President and CEO Kirk Tanner said on an earnings call in February that the company plans to begin testing dynamic pricing as early as 2025.
This feature will be rolled out along with a digital menu board that reflects price changes. The company plans to invest approximately $30 million in these efforts.
“We are always focused on improving the experience for our customers and crew, and in that spirit we are further leveraging technology in our restaurants,” Tanner said.
Tanner, who took over as chief executive officer of Wendy’s last month after a long career at PepsiCo, said on a conference call how much prices could change or how exactly the dynamic pricing model would work. He didn’t give many details about what he would do.
Wendy’s customers expressed outrage over the new strategy on social media, with some calling for a boycott. One person joked that he was going to have lunch at 11 a.m. or 3 p.m.
In a statement released after this article was published online, Wendy’s said it “has no plans to increase prices during the times when our customers are most likely to visit our stores.” Rather, the company says its dynamic pricing plans will allow it to “change its menu offerings at different times of the day, especially during slower hours, and make it easier to offer discounts and valuable benefits to customers.” There is a gender,” he said.
The announcement comes as U.S. food inflation appears to be calming down after two years of rapid growth. Household food costs rose in January, but at a much slower pace, with restaurant chains and other food providers saying they no longer raise prices as sharply. This cooling may be partially explained by consumers resisting price increases and businesses saying they need to cut spending on labor and packaging materials. .
By adopting the pricing strategy, Wendy’s joins many other companies that have adopted dynamic pricing, which often leaves customers disappointed.
For example, Uber and Lyft charge more when demand exceeds the availability of cars on the road, such as during rush hour or bad weather. Concertgoers have also experienced dynamic pricing, with some Bruce Springsteen fans, for example, seeing Ticketmaster seats priced lower when he returned to playing with his band after a multi-year hiatus. Some people found it to be more than $5,500.
Dynamic pricing has also been widely adopted in the commercial theater world, helping theaters recover from losses. But variable prices can be damaging, as new attendees are likely looking for tickets to a show just before tickets become more expensive.
Many consumers now pay attention to price changes. A January 2023 survey of 901 U.S. consumers by Capterra, a company that connects businesses and software vendors, found that 81% of consumers consider menu prices before choosing where to eat. Half of respondents said they checked “always or often” and noticed that a restaurant’s prices had changed.
According to Capterra’s research, approximately 52% of those surveyed believed that dynamic pricing was price gouging.
For Wendy’s, Tanner said dynamic pricing plans and accompanying digital menu boards will help drive sales while improving order accuracy and the crew experience.
Wendy’s also plans to use artificial intelligence to change its menu. Tanner said the company announced in December that it would expand its use of a platform it had deployed as part of its drive-thru experience, called Fresh AI, 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 our customers.”
