One of the first lessons of economics is the law of supply and demand informing prices. At Wendy’s, however, some menu item prices might also change within one single day based on the time, as the fast food chain experiments with this new business model.
The system is known as “dynamic pricing,” and is something similar to a model used by Uber; the ride-sharing app automatically charges more during high-demand times such as rush hour. However, in a follow-up statement, the fast food chain assured that this dynamic pricing can go the other way, to the customer’s benefit. How?
Wendy’s is introducing dynamic pricing, with menu prices that change throughout the day.
When discussing its future business strategies during an earnings call, Wendy’s revealed that it would start by testing dynamic pricing in 2025. According to Wendy’s CEO Kirk Tanner, they are looking to experiment with “more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling.”
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Wendy’s recently invested $20 million in new digital menu boards, so far just in the U.S., to allow for instantaneous price changes throughout the day.
Wendy’s actually first teased these digital menus in 2022 as part of a mockup for a redesigned Wendy’s featuring overhauled pickup windows, an updated interior, and kitchens with greater digital utilities.
Wendy’s clarifies what customers should and should not expect from the new menus and price change
Upon its initial introduction, this dynamic pricing model made it seem that prices would only increase during the day, to the customer’s detriment. Wendy’s has sought to clarify that diners can expect discounts and other related deals to pop up with this digital menu, stressing that prices can change in both directions with this adaptive menu.
For example, the new menu could offer discounts during slower times of the day and – the clarification assured – would not increase prices during high-traffic hours.
“We have no plans to do that and would not raise prices when our customers are visiting us most,” the chain said in a blog post. “Any features we may test in the future would be designed to benefit our customers and restaurant crew members.”
“We expect our digital menu boards will drive immediate benefits to order accuracy, improve crew experience and sales growth from upselling and consistent merchandising execution,” said CEO Kirk Tanner.
How do you feel about this new pricing model?
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