Wendy’s is Reportedly Planning to Test Uber-Style 'Surge Pricing'
Uber and Lyft passengers are used to getting hit with surge pricing during busy times of the day or in the event of inclement weather. But could that same model work for fast food? That's evidently what Wendy's newly-minted CEO Kirk Tanner is banking on.
According to the Daily Mail, Tanner said during a recent investors call that the company is planning to begin testing "digital menu boards" in 2025, which would allow locations to update prices in real-time at little to no expense. The new system, which will reportedly cost $20 million, will allow Wendy's to bump up prices during the busiest time of the day, such as during the lunch rush.
If the plan comes to fruition, Wendy's would become the first fast food chain to use surge pricing or "dynamic pricing," which allows businesses to set flexible prices for products or services based on market demand.
Many fast food chains, including Wendy's, already set different prices based on location. As the New York Post points out, the cost of a Dave’s Single quarter-pound cheeseburger costs $5.99 at a location in Newark, NJ; whereas it jumps to $8.19 in Times Square.
However, the plan also has the potential to backfire, especially when you consider that Wendy's is already the most expensive fast-food chain in the United States, according to the consumer transparency platform PriceListo. Not to mention, menu prices already rose 35 percent between 2022 and 2023 due to inflation.
"They could shoot themselves in the foot by introducing something customers aren't ready for," Steven Suranovic, associate professor of economics at George Washington University, told the Daily Mail. "If people feel like they're getting gouged, they're not going to take kindly to this dynamic pricing strategy."
And whereas Uber and Lyft only have competition with each other, the same certainly can't be said for Wendy's. It remains to be seen whether customers will decide to take their money elsewhere, if the company follows through with the bold strategy.
