Wendy’s on Tuesday appeared to walk back comments from CEO Kirk Tanner that prompted widespread reports — and backlash — over the idea that the company would be introducing surge pricing for burgers and fries.
“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,” Tanner said in the company’s fourth-quarter earnings call.
Dynamic pricing, commonly referred to as surge pricing, means that prices fluctuate based on demand — whether that demand goes up or down.
Similar to models at Uber and Lyft, people expected Wendy’s menu items to vary in price during peak hours and slow periods of the day.
The new pricing model was discussed as part of a $20 million investment to install digital menu boards at all its US restaurants by 2025. Tanner also said on the call that the company planned to invest another $10 million over the next two years to upgrade its digital menu boards around the world.
After the CEO’s comments, Business Insider contacted Wendy’s by email to ask for more details, including how much prices would vary under the new model, which BI’s email referred to as “surge pricing.”
Wendy’s responded with a statement about what the digital menu boards would entail but didn’t dispute the “surge pricing” characterization.
As word spread about the new change on Tuesday, people took to social media to complain and post memes about the possibility of higher prices.
After an online stir about the new pricing model, a Wendy’s spokesperson, Heidi Schauer, sent an update Tuesday evening saying, “Wendy’s will not implement surge-pricing, which is the practice of raising prices when demand is highest.”
An announcement on the company website reiterated that digital menu boards would allow stores to change featured items more easily and would offer discounts to customers.
The statement said Tanner’s mention of dynamic pricing was “misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants.”
Wendy’s said the digital menu boards would offer discounts and value offers to customers, “particularly in the slower times of day.” The post also said any new features would serve only to benefit the customer.
So once the policy is in effect, you may find discounts on offer when you pass by an empty Wendy’s location.
The change marks one of several by the company to become more tech-savvy.
Wendy’s says it’s spending $15 million this year to improve its mobile app and loyalty program. The company expects global digital sales to reach $2 billion by 2024, a year earlier than planned, Tanner said.
Wendy’s also plans to keep expanding its AI-enabled drive-thru, which it launched in June. The company plans to implement AI menu changes and suggestive selling based on factors like weather by 2025, according to a statement provided to BI.
February 28, 2024: This story has been updated after Wendy’s released a statement saying it would not start surge-pricing some menu items.
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