Wendy’s (WEN) is about to overhaul the way it prices its menu items, and customer’s aren’t too thrilled about the controversial change.
The fast-food chain is following in Uber’s footsteps and will introduce “dynamic pricing” or “surge pricing” into its stores by 2025, along with new digital menu boards, meaning that depending on what time of day you enter the store, you could pay more or less for an item on the menu, according to a recent earnings call.
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“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 Wendy’s CEO Kirk Tanner during the earnings call. “Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling.”
Dynamic pricing is a way that can help businesses boost sales in its stores by balancing out supply and demand. This involves adjusting the cost of items that customers are likely or least likely to purchase based on the time of day and other factors based on demographics and consumer habits.
If you haven't heard by now, @Wendys plans to implement "dynamic pricing" by 2025 — Is fast food worth putting up with surge pricing?
— TheStreet (@TheStreet) February 27, 2024
Wendy’s is hoping that the upcoming change to the way it prices its items will “support sales and profit growth across the system.” It is also planning to expand artificial intelligence across its stores, as it is already seeing an improvement in “speed and accuracy, and is aiming to invest roughly $20 million into rolling out digital menu boards at its U.S. restaurants by next year.
Many users took to social media platform X to express their distaste for Wendy’s upcoming dynamic pricing, where some have even labeled the change as an act of “greed” from the franchise.
This system is out of control, man. The only way to rein this in is to cut all unnecessary spending until they feel it. The greed has reached unsustainable heights. https://t.co/smtnOMtFqw
— American girl in Portugal 💛 (@thedopebohemian) February 26, 2024
@Wendys it’s giving greedy. Y’all really wanna charge even more than you are now for the declining quality? If the goal was to lose customers, you’ve accomplished it. https://t.co/yTxcigoCxB
— Katie (@katieincolumbus) February 27, 2024
@Wendys Sorry Wendy's I barely eat your crappy microwaved burgers now. Dynamic pricing is dumb. Now I just wont go now so you lose all my business.
— One Big E (@doina100mph) February 27, 2024
I remember when your burgers used to be cooked before you ate them. Now it's just junk. I'll be planting lots more vegies this year
It is not a major surprise that Wendy’s is planning to experiment with dynamic pricing in its stores as the restaurant has recently seen a slowdown in sales growth in the U.S., according to its fourth quarter earnings report for 2023. During the quarter, systemwide sales in the U.S. only grew by 2.3%, this is a significant decline compared to the same quarter in 2022 where sales increased by 7.2%.
The company also saw a decrease in its U.S. company-operated restaurant margin, which is how much profit is made after sales and after direct costs are paid.
During the fourth quarter last year, Wendy's had a 13.5% restaurant margin, which is a decrease from the 15.1% it had during the same time period the year before. Wendy’s claims that the recent decline was primarily due to “higher commodity costs, customer count declines, and higher labor costs.”
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