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Wendy’s will start experimenting with surge pricing, much like Uber and Lyft, as the company rolls out digital menus to all its United States restaurants by 2025, according to the company’s February earnings call. Under the test, burgers, Frosties, and other menu items will have “dynamic prices,” costing more during times of increased demand.
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“Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing,” said Wendy’s CEO Kirk Tanner on Feb. 15’s earnings call. “We are planning to invest approximately $20 million to roll out digital menu boards to all US company-operated restaurants by the end of 2025.”
Part of the benefit of these digital menu boards is you can change prices as much as you’d like. Consumers are familiar with surge pricing through rideshare services like Uber and Lyft, where prices fluctuate significantly depending on demand. Dynamic pricing is a relatively new concept in the fast-food world, with little precedent. The fluid prices change given supply, demand, competitor pricing, and other external factors that can be algorithmically calculated.
A Wendy’s Baconator costs $12.24 in New York City, but under dynamic pricing, that price could fluctuate throughout the day. The burger could increase in price around lunchtime or go down during a slow afternoon. Wendy’s did not provide details as to how severely prices could fluctuate.
Tanner expects dynamic pricing will result in immediate sales growth, but it’s a risky approach. A majority of consumers (52%) say dynamic pricing is equivalent to price gouging, and 65% say it makes the decision of where to eat more difficult, according to a Capterra survey.
This is hardly the first time Wendy’s has tried to stuff tech into your biggie bag. The company had plans to unveil an AI chatbot powered drive-thru back in May. However, it later came out that the secret technology behind some of these experiences was really just humans. The company also announced a fleet of tunnel-dwelling, self-driving robots to help deliver your order in 2023.
Wendy’s is hoping that we’re all used to surge pricing from ridesharing services, and won’t mind when it hits the dinner plate. The company notes that this will just be a test to start, made possible by their digital menus.
A Wendy’s spokesperson told Gizmodo Tuesday its dynamic pricing will also enable discounts at slow times of the day. The fast food chain says these changes will “drive traffic” during slow parts of the day. Wendy’s did not comment on higher prices during peak hours but confirmed these changes could be coming as early as next year.
