Wendy's will experiment with dynamic surge pricing for food in 2025

This is not going to be well-received by their customers and is likely to send business to McDonald's and Burger King instead.

They also really shouldn't be doing "suggestive selling" whether with humans or machines. Just shut up and take the customer's order rather than trying to talk them into ordering something. Nobody likes when stores or restaurants do that even if it "increases metrics" because some people choose to buy the item being aggressively pushed. What you don't see are all of the people who go somewhere else to avoid having to deal with that.

This has been described as similar to Uber/Lyft surging but it’s different in a few critical ways that I suspect consumers are less tolerant of.

When Uber/Lyft are surging it incentivise more drivers to go to the surge area. This raises supply and the surge rate decreases. Drivers are distributed automatically where they are needed. Overall trips taken should be higher compared with a no surging model. So it shifts both the demand (higher ride price) and the supply curves dynamically. That’s an easier model to market to customers as there is at least some logical sense behind it.

However in Wendys case dynamic pricing has no effect on supply. It just modifies the demand curve.

Fundamentally they are betting that their food demand is inelastic enough that they’ll make more money overall. That just feels more exploitative and is going to be harder to market.

It seems insane to me to market this as "the food costs extra at certain times of day" rather than "Happy Hour-- 20% off!"

During surge periods restaurants redirect customers all the time.

"We're sorry, there's a 15 minute delay for hamburgers; are you OK waiting or would you prefer to order something else".

Also:

"Happy hour pricing".

As long as they have a somewhat reasonable fixed maximum price I suspect consumers will accept this quite well. Then it wouldn't be much different than dynamic happy hour pricing or any of the many other types of sale pricing that other stores run.

And it's not much different from what McDonald's is doing. The pricing for walk in customers at McDonald's has gotten horrendous. Yet if you use their app you can pretty much always find a coupon to get a more reasonable price. McDonald's would get a good reception if those more reasonable prices were also available in store during off-peak hours.

Will they increase the pay of the employees who work during the surge periods proportionally to the size of the price increase?

Are they going to pay their employees more during surge? I worked food industry as a teenager with a stint in fast food- it can be crazy, you get physically and mentally tired, from both moving quickly but from the increased number of angry customers. Hazard pay!

Keep reading this everywhere, and it's 100% a publicity stunt perpetuated by gullible journalists.

I was watching a bit of youtube this morning, and there was a wendy's ad. It ended with "All this for $5!" as the final pitch for whatever meal it was. If they do dynamic pricing, they'll cut themselves off from that kind of ad entirely right?

You (generally?) can't advertise one price, and charge a different one when the customer actually shows up.

   "Dynamic pricing can allow Wendy's to be competitive and flexible with pricing, motivate customers to visit and provide them with the food they love at a great value. We will test a number of features that we think will provide an enhanced customer and crew experience."

So I guess that means somethings things will cost most and sometimes things will cost less? I would hope there's something on those digital signs that calls out the pricing.

"THIS BURGER IS 25% MORE THAN NORMAL!" or "25% OFF YOUR FROSTY BECAUSE IT'S SNOWING!"

Hopefully there's some way to escape the line after you notice that your fries are going to cost $15 because there's a long line.

It’s not a new idea but i’ve always “wanted” to do something similar with beer at a long bar with many many kegs of craft beer. Idea is to make sure all the product ends up moving and nothing stays untouched. Massive train station style flipping letter/number signage behind the bar with updating prices every 15-30min or something if it’s busy. One of the laundry list of reasons this is just a pipe dream is alcohol pricing like this is definitely illegal where I live.

The impression I get is that this is another case of someone impressed with a tech industry practice misapplying it outside of any sensible context. I see it a lot with people using kanban boards and "sprints" when doing something very predictable, repeatable, estimable, and plannable, and a Gantt chart could easily be created for the whole project. Because the cool kids in software are doing it. "We have an app now, how about surge pricing?"

I don't think Wendy's is good enough to warrant paying extra for. If their prices increase I would rather just eat somewhere else.

price discrimination can go much further than surge pricing! i wonder if they'll also experiment with special discounts (or exemption from the surge pricing) for people who recently ate at mcdonald's, haven't eaten recently at wendy's, are carrying cheap brands of cellphone, have not recently taken uber, live in a poor neighborhood, or shop at discount stores? and if someone eats at wendy's more than twice a week or habitually orders especially addictive items, you could raise the prices you charge them. you could even disingenuously claim that you're trying to protect your customers' health by preventing them from overeating

here in buenos aires there's apparently a law requiring restaurants to post prices for all their menu items, so in additional to the 'digital menuboards' in all the fast food restaurants, there's always a laser-printer printout in 10-point type on the wall which lists many food items that rarely or never appear on the digital menuboards, such as hamburgers without fries and drinks. so, unless that law goes away, they would have to cloak such price discrimination as discounts, maybe discounts for coming in at off-peak hours ('happy hour', as several people have referred to in this thread—though if alcohol-induced impairment of your consciousness tends to make you happy, i think something is very wrong with the way you're living the rest of your life)

for the most part, privacy is a public good rather than a private one; the benefits to privacy flow to society in general rather than the individual whose privacy is protected. price discrimination is an exception to that general rule, but biometrics make it impossible to preserve your privacy in wendy's; you can't order food there without exposing your voiceprint, your irises, and usually your face

Wendy's refutes the "surge" verbiage. https://apnews.com/article/wendys-burger-pricing-ef75fa9214b...

And of course the price minimum will be what we pay today, it will only get more expensive.

I think this is an act of desperation and will completely fail. Customers will see the higher prices during certain times and just not go there. These kinds of games are insulting to consumers and represent very narrow, bean counter mentality.

I hope their AI chatbot offers burgers for negative dollars during periods of low demand.

And consumers can experiment with eating elsewhere.

This is a good example of dystopian capitalism run amok.

Next logical step --- they track those that fall for this and start charging them "surge" prices all the time. Then some accountant gets the bright idea that they can sell their "sucker list" to other like minded establishments.

And soon these "suckers" will find themselves branded for life. Where ever they go, they will be charged more.

[dupe] wasting our time OP

More discussion a few days ago: https://news.ycombinator.com/item?id=39514464

I think a lot of people will complain, but most of the clientele won't change their spending habits before other companies follow this trend.

Opportunity for entrepreneurs to buy low and sell high.

Especially since fast food demand appears to be much easier to predict.

It sounds like a new c-level executive just got hired and found a 'great way to increase profits'.

I used to like wendys like 5 years ago

They're about to test demand elasticity and find out. People are going to go elsewhere. For demand-based pricing to work the price has to be allowed go to zero or near zero. They're not going to do that. This has to be another Ivy League graduate's idea that only took one economics course. This is going to really anger people. I think I might buy puts on WEN.

We just did this one

Hot take -- good!

Labor is a huge component of food costs.

Labor cost per menu item is directly dependent on sales per time unit, as the labor has to be staffed regardless of sales.

Ergo, food at low-volume times (late night) should cost more.

PS: It's not as if airlines, online retail, etc. aren't already doing this. I find it hard to get outraged that one industry is different than others.

Wait until they realize that they can tie this AI into facial recognition at those big screen kiosks and they change the prices based on the appearance of the person ordering.

Wendy’s can go screw thrmselves.