Name: Surge pricing.
Age: In one way or another, it’s been going on since supply first met demand.
Appearance: That depends on what time it is.
And what time is it? It’s lunchtime.
Great, let’s have lunch. No, we’d better wait.
Until when? Until after lunch.
Why would I want to eat lunch then? Because it’s cheaper – that’s the point of surge pricing.
To make people eat lunch when they don’t want lunch? Essentially, yes: to even out demand across the day, while maximising profits.
Whose idea was this? Airlines have used this strategy for decades. Ride services such as Uber also charge more at peak times. Now restaurants are taking up the idea.
Where? According to the Wall Street Journal, some restaurant chains in the US are using new technology to vary pricing according to demand, and seeing a jump in their takings.
In that case, why wouldn’t you deploy surge pricing? Customers really don’t like it. Last month, Wendy’s CEO, Kirk Tanner, seemed to announce that the chain would adopt surge pricing in 2025, but after a backlash the company quickly clarified that it was only talking about “dynamic pricing”.
What’s the difference? Dynamic pricing means changing prices in response to various factors, one of which might be demand.
And surge pricing? Is the practice of increasing prices in response to high demand, which Wendy’s denies is its intention. “We have no plans to do that and would not raise prices when our customers are visiting us most,” read a statement.
Quite a hair-splitting distinction. Yes. And it didn’t stop Burger King capitalising on Wendy’s discomfort. Its X account posted a free Whopper offer, adding: “We don’t believe in charging people more when they’re hungry.”
Could something like this happen in the UK? It already has. In September, the group that owns the Slug & Lettuce chain announced it would introduce surge pricing at busy periods in 800 of its 4,000 pubs, creating what was described by critics as an “unhappy hour”.
An unhappy hour at the Slug and Lettuce – it’s almost poetic. And as far back as 2018, the posh London restaurant Bob Bob Ricard adopted a model where prices fell at times of lower demand.
That’s just an early bird special. No one said this was a new idea.
But is it a good idea? Certainly not from the consumer’s point of view: the value of a large fries doesn’t rise just because the restaurant is busy.
Do say: “Burritos are falling – buy, buy, buy!”
Don’t say: “How much is a burger if I can prove I don’t want it?”
