The cost of your burger could soon vary depending on your hunger levels.
Wendy’s, the second-largest fast-food chain in the U.S., announced during a recent earnings call that they will be testing a “dynamic pricing” model. This model will adjust prices throughout the day based on demand.
During an earnings call on Feb. 15th, Wendy’s CEO Kirk Tanner revealed that the chain is planning to introduce “more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling.” This change is expected to take effect in 2025 and is part of a $20 million investment in new digital menu boards that will allow the company to adjust prices based on demand.
Experts believe that other major brands may follow suit. John Zhang, a marketing professor at the University of Pennsylvania, predicts that “dynamic pricing will be the new normal.”
Wendy’s is not the first food and beverage company to experiment with dynamic pricing. McDonald’s has already tried it in select locations, and Coca-Cola is testing dynamic pricing vending machines in Japan.
While some customers are critical of this practice, dynamic pricing is already prevalent in various industries, including airlines and online retailers like Amazon. Businesses are adopting electronic shelf labels to adjust prices based on demand and stock levels.
Wendy’s and experts argue that both businesses and consumers can benefit from dynamic pricing. Retailers can better manage traffic flow throughout the day, resulting in improved service for customers and employees. Consumers may choose to pay a higher price for convenience, while others may wait for a better deal.
Despite potential resistance in the fast-food industry, Wendy’s spokesperson mentioned that this investment aims to provide value and enhance customer experience.
However, surge pricing could face challenges in an industry known for its quick service and affordability. “Customers are just going to go somewhere else,” Zhang notes.