Lasse Roiha’s Post

Don’t call Wendy’s new pricing plan “surge pricing.” In a blog post earlier this week, the fast-food chain explained that its test of new menus with prices that change throughout the day is not meant to cost more for customers. “This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants,” the company statement read. “Digital menuboards could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day.” In an email to CNN, Wendy’s was more blunt: “Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest. This was not a change in plans. It was never our plan to raise prices when customers are visiting us the most.” But the questions over what to call Wendy’s experiment – surge pricing? Dynamic pricing? Something else? – underscore the PR problem around a pricing system that’s already been used for years in a range of industries, from ride-sharing to airlines to your local happy hour.

*Update: Wendy's has "no plans" to raise menu prices at busy times of day, the company clarified in a statement. More here: https://lnkd.in/gnb2bR85 My previous post: I'm so interested in The Wendy's Company's decision to introduce surge pricing and would love to have been a fly on the wall in the many, many meetings and strategy sessions that likely brought it to life. The cost-benefit analysis and growth modeling is specifically interesting to me: Will the increased profit from surge pricing outweigh the potential lost sales? Will surge pricing differ by location? Ex. Will an airport Wendy's activate surge pricing at lunch but a less-trafficked Wendy's at a relatively quiet rest stop would not? I want to know so much more! What interests me is when I drive by a Wendy's, there's usually a McDonald's and a Burger King just down the road. How prominently will surge pricing be displayed? Will I be at the front of the drive-through line by the time I see it, in which case I'm less likely to leave the line? If I'm at an airport, I'd likely be just a few steps away from another food vendor, in which case, it's a lot easier to walk away. I have so many questions! What do people think?

Is surge pricing meant to “help” the average American or simply improve their bottom line? After Uber, the fast food restaurant The Wendy's Company has become the first to try a new pricing strategy called "surge pricing.” This means that the prices of menu items go up and down based on how busy the restaurant is. Wendy's invested a significant amount of money - 20 to 30 million dollars, to install new digital menu boards in many of their locations to facilitate this pricing model. Here's an example of how surge pricing works at Wendy's - 1. On a quiet Tuesday morning with only one car at the drive-thru, a sandwich might cost as little as 99 cents. 2. However, on a busy Thursday afternoon when the restaurant and drive-thru are crowded, that same sandwich could cost $3.99. 3. The price difference, from 99 cents to $3.99, is determined by the higher demand during busier periods. But is it really fair to keep changing prices like this? Wendy's claims that customers have not expressed anger about surge pricing yet. However, the question remains whether it is truly fair to constantly adjust prices in this manner. Some say that surge pricing is an unjust way for the company to extract more money from customers during peak hours. What do you think - Does it truly help customers or just help Wendy's make more money? #pricingstrategy #consumerfairness #fastfoodindustry

There has been a lot of talk about Wendy's experimenting with dynamic pricing - and it is a subject that will keep cropping up. Basically charging more for a burger when it is busy and less when it is quiet With digital menus, this is now possible. Whether it is a good idea or not is a whole other matter as Wendy's has seen in the last couple of days! For me, the argument for dynamic pricing in hospitality only works in narrow circumstances 🍔 during peak times you are at capacity - and if you had more capacity you would make more sales 🍔 Customers are not that price sensitive 🍔 Easy substitutes do not exist But for most consumers it will seem like gouging - especially where we are now (years of high inflation, now dropping into recession). However... Stonegate pubs announced dynamic pricing back in September 2023 and since then it has largely gone unnoticed. It will be interesting to see their figures when they are announced in a couple of months. It feels like dynamic pricing can work in pubs as prices are not that clear in the first place! Not the same though with fast food outlets though. But as I have pointed out before - restaurants already operate staged pricing (although its a stretch to call it dynamic) 🍽️ Weekday lunch menu vs weekend a la carte 🍽️Discounts and promotions during quiet periods 🍽️ Set menus with high spend on key occasions (Xmas, NYE, mothers day, valentines day). 🍽️ Higher prices for delivery websites In general, we don't feel there is anything wrong with the above. We're used to it. So is it just a matter of time until dynamic pricing is widespread? https://lnkd.in/ezytDRBx

Apparently I didn't have enough reasons to stop ordering take-out. Just saying the words "customer savings" doesn't actually mean anything when you can arbitrarily change the prices of your offerings on a whim. I expect to see a massive restructuring of the team in charge of this decision, and if not, I expect demand to tank. If I'm wrong, and this revolutionizes fast food, great for them and I'll need to hit the books on the 4P's again. But all I see is consumer frustration at a tone-deaf response to an ever increasing cost of living from a corporation that is not losing money. My basis for my criticism is the understanding that fast food is prioritized because of predictability of service, quality, and price. We begrudgingly accept rideshare "surge" pricing due to the perception of a limited amount of available drivers. You don't really want your customers to hold their nose when they buy from you, ESPECIALLY WHEN YOU SELL FOOD.

🚫 📈 Pricing Clarification Alert 📉 🚫   Wendy´s 🍔 recently got roasted on social media after this week’s blog posts. They announced to try out “dynamic pricing” in their restaurants.   While innovation is key, it seems this move has left a sour taste in many customers mouths, as dynamic pricing was referred to surge pricing by the media and social media community.   Let´s set the record straight: Surge pricing is not the same as dynamic pricing! Surge pricing typically involves temporary increases due to high demand, while dynamic pricing adjusts prices based on various factors like supply, demand, competitor pricing and taking real time data into account.   Recognizing the negative impact, Wendy´s revoked their initial statement by emphasizing their commitment to maintain fair, transparent prices and not to implement a surge pricing strategy 💸   What do we learn? 💡   #Pricing is a sensitive terrain with profound consequences if mismanaged, also in case of marketing & communication 📢 . The impact of Pricing on customer perception, market competitiveness and overall business success is undeniable 🎯 #dynamicpricing #pricingknowledge #pricingiseverywhere

Burger King is reassuring customers that dynamic pricing is not in their plans. This follows a customer’s surprise at a sudden price increase while placing an order, where the total jumped from US$33.89 to US$34.18. This incident sparked concerns about dynamic pricing at the fast-food chain. However, Burger King confirmed this was just a technical error and not a new pricing strategy. They’re actively working to fix the issue. Meanwhile, Wendy’s made headlines earlier this year with plans to test dynamic pricing and other digital enhancements. This announcement faced backlash and accusations of price gouging. Yet, Wendy’s clarified that it doesn’t mean higher prices during peak hours. Instead, they plan to use flexible menu displays and offer discounts during slower periods, aiming to enhance the customer experience without making it more expensive. These incidents highlight how sensitive fast-food pricing can be. Customers think that the appeal of fast food lies in its consistent affordability and convenience. Therefore, any hint of dynamic pricing can lead to backlash. If prices become unpredictable, they might seek alternatives. Thus, fast-food chains need to balance innovative pricing strategies with customer expectations. In essence, while dynamic pricing works in some industries, it might not fit well with fast food’s value proposition and customer expectations at this time. Nevertheless, fast food businesses can still modernise their pricing strategies. The key is to understand customer value perceptions and communicate their pricing strategies clearly. 

Burger King is reassuring customers that dynamic pricing is not in their plans. This follows a customer’s surprise at a sudden price increase while placing an order, where the total jumped from US$33.89 to US$34.18. This incident sparked concerns about dynamic pricing at the fast-food chain. However, Burger King confirmed this was just a technical error and not a new pricing strategy. They’re actively working to fix the issue. Meanwhile, Wendy’s made headlines earlier this year with plans to test dynamic pricing and other digital enhancements. This announcement faced backlash and accusations of price gouging. Yet, Wendy’s clarified that it doesn’t mean higher prices during peak hours. Instead, they plan to use flexible menu displays and offer discounts during slower periods, aiming to enhance the customer experience without making it more expensive. These incidents highlight how sensitive fast-food pricing can be. Customers think that the appeal of fast food lies in its consistent affordability and convenience. Therefore, any hint of dynamic pricing can lead to backlash. If prices become unpredictable, they might seek alternatives. Thus, fast-food chains need to balance innovative pricing strategies with customer expectations. In essence, while dynamic pricing works in some industries, it might not fit well with fast food’s value proposition and customer expectations at this time. Nevertheless, fast food businesses can still modernise their pricing strategies. The key is to understand customer value perceptions and communicate their pricing strategies clearly. #pricingnews #taylorwellspricing Source: https://lnkd.in/gBPd95RT

Wendy’s recent announcement about implementing dynamic pricing at their restaurants has sparked debate. Initially met with skepticism, Wendy’s clarified their intentions to utilize dynamic pricing to offer discounts during slower periods, presenting the strategy in a more positive light. At DKOldies, we allow market forces to guide our pricing based on supply and demand. We also get critisim that says if we sell out of an item at a certain price, we should refrain from restocking it if we have to raise the price to get it back in. However, our approach considers the broader market dynamics, recognizing that replenishing inventory at a higher price may be necessary to ensure the availability of sought-after items. We strive to strike a balance between meeting customer demand and responsibly managing pricing fluctuations in the retro gaming market. The adoption of dynamic pricing by fast food businesses reflects a broader trend fueled by technological advancements. By adjusting prices based on demand, businesses aim to incentivize customers to visit during slower times, ultimately improving efficiency and customer satisfaction. While dynamic pricing at fast food restaurants may face initial resistance, if done correctly it benefits both customers and businesses. Customers may spend more during peak times, less during off peak times, but with shorter overall lines to accommodate more customers in total. Despite initial skepticism, dynamic pricing at Wendy’s can lead to more customers and more business. In this new world, restaurants that effectively use dynamic pricing to enhance the customer experience stand to gain a competitive edge and thrive in the market.

Wendy’s Dynamic Pricing Dynamic pricing works for Uber, airlines and concert tickets.  But can it work for fast food? Adjusting price based on demand can make sense.  Uber vehicles stuck in traffic lose income potential.  Selling seats with variable pricing is a smart play on airline supply and demand.  And why should scalpers make all the money on Taylor Swift and Super Bowl tickets? However, sales dynamics are different for fast food. First, there is no problem caused by higher demand at a burger restaurant.  In fact, greater volume equals greater profits.  Second, there is no shortage of supply during the lunchtime rush.  What I can’t buy today, I can easily buy tomorrow. Third, unless you shop fast food on their apps, you will be unpleasantly surprised when your car finally makes it to kiosk and you find your burger costs more than you paid yesterday. Surprising loyal, inflation-battered customers with sudden price increases seems like a losing proposition. Of course, one can see how this happened.  Marketers and corporations seeking higher profits and the favor of Wall Street will see advantages.  Higher margins during peak volume periods could be great for the bottom line.  Or it might stretch out the traditional lunch timeframe as customers enjoy faster service or get wise and buy their food just outside of the peak time (which might not increase profit as much but is easier to handle). The other key questions here:  Is Wendy’s a market mover?  Is their customer base loyal enough to put up with this?  Would McDonald’s follow their lead?  Will Wendy’s customers simply switch to a competitor who is often across the street or next door? Our bet is this strategy will fail if they implement it.  Lower income consumers who are more likely to shop at Wendy’s but least equipped to withstand inflation-related pricing will be unhappy to learn their burger and fries cost more simply because a lot of people are hungry at lunch. Would you do this to your best customers? Rand Pearsall is president of GPS Customer Strategies which specializes a customer-first approach to marketing. https://lnkd.in/eAEuVffK