I don’t eat at Wendy’s very often so I don’t really care how they set their prices. But I am concerned that this could be a trend toward ripping off customers at other restaurants. So I sincerely hope that Wendy’s doesn’t do “dymamic pricing” given the negative publicity surrounding the announcement.
Wendy’s CEO proudly announced he was rolling out digital menu screens that allow dynamic pricing, to boost profitability. The news media reported that dynamic pricing is equivalent to surge pricing, used by Uber and Lyft to raise prices during times of high demand. That is the way dynamic pricing is generally defined.
There was a backlash from the public and Wendy’s now claims that it never intended to raise prices during peak demand, and instead wants to lower prices during low demand. This sounds like BS.
For example, lets say Wendy’s decides to do an across-the-board price hike of 10%. Then drops it by the same amount during low demand so the low demand price is the same as the pre-increase price. Is that surge pricing? Is that the same as simply raising prices 10% during peak demand periods? Of course it is.
People are trying to make analogies to other industries. In the hotel business it’s common to drop prices mid-week to encourage business. But if the room isn’t rented the hotel makes no revenue on that room. If a burger isn’t cooked today, you can cook it tomorrow. The two are not analogous.
It would make more sense to improve the restaurant’s food, then they can charge more because people feel it’s worth the money.
If Wendy’s is really not raising prices, just lowering them at off hours, what does that do to the brand? If you paid $5 for a chicken sandwich at 3pm is it really worth $8 to you any more? Or would you just go somewhere else during peak hours and only go to Wendy’s during off hours because their food is no longer worth the high peak hour price?
I think it’s possible, maybe probable, they will train customers that their food isn’t worth the peak hours prices. So rather than increasing profit they will drive customers to competitors during peak hours. The CEO has already created a PR problem and helped the competition. I would not be surprised if Wendy’s deals with this issue by replacing the CEO.
vegchili 