Wendy’s Teases “Uber-Style” Surge Pricing

The fast food company, Wendy’s, has teased a saucy new pricing strategy scheduled to go into effect sometime in the future — or maybe never.

The company announced that it planned to test a new digital menu board, which can enable quick changes to prices in response to demand and other factors. Such "surge pricing," also called "dynamic pricing," would allow Wendy’s to tweak the prices of its menu items based on the time of day, demand, location, and possibly even the weather. 

The company's February investor briefing showed what a dynamic pricing menu might look like.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Will you pay more at Wendy's?

On Tuesday, however, Wendy's walked back the pricing strategy, citing misconstrued media reports. In a statement on the company's website, Wendy's said that it did not intend to raise prices during peak hours.

Wendy's added that the new digital menus would offer more flexibility to change the display of food and drink items while also providing the opportunity to offer discounts when business is slower.

Introducing enhanced features

Dynamic or surge pricing is not new. Airline and hospitality companies such as Airbnb have benefited from dynamic pricing for years. Surge pricing is also currently used by ride-sharing giant, Uber. The company alters the cost of a ride based on demand during rush hour or bad weather. 

When done well, dynamic pricing may not be such a bad thing, as it can benefit both the companies setting prices and consumers. However, when poorly designed, it may fail to adequately match supply and demand, hurting both companies and consumers.

Alongside testing more enhanced features like high-tech menu boards, AI-enabled menu changes and suggestive selling, Wendy’s new menu boards could mean greater profits.

Dave Thomas opened the first Wendy’s restaurant in 1969 with a commitment to serve fresh food at a fair price in a comfortable atmosphere. More than 50 years later, Wendy’s approach, “ Good Done Right,” may face scrutiny if and when the company embraces dynamic pricing.

In that case, it wouldn't be a surprise if customers simply changed their lunch hour from noon to 2 pm. 

Related Content

• Did You Overpay for Thanksgiving Dinner?
• The 'Food Tax': Grocery Tax by State
• How Inflation Can Impact Your Taxes
• Here's Who are the Worst Tippers