Wendy’s Dynamic Pricing Experiment

By: Kaydee Ambas · February 28, 2024 · Reading Time: 2 minutes

What Is Dynamic Pricing?

Your Wendy’s (WEN) 4 for $4 meal could soon cost $5 or $6 — depending on when you order it.

That’s because the fast food giant plans to experiment with “dynamic pricing”, similar to the surge price models deployed by companies like Uber (UBER) and Ticketmaster (LYV). Dynamic pricing means menu prices might change based on demand and customer traffic. The strategy is designed to help companies maximize profit during busy periods.

Wendy’s announced it will begin testing dynamic pricing as early as 2025.

Wendy’s Growth Plan

Dynamic pricing is just one part of Wendy’s strategy to increase sales.

The burger chain plans to invest $20 million in developing digital menus for its U.S. locations. In addition to being able to change prices on the fly, these menus will incorporate AI, intended to help smooth out the ordering process and recommend products to customers.

A New Standard?

Dynamic pricing is an increasingly common practice among restaurants big and small, and digital menus could curb the time and labor costs of changing menus, potentially accelerating this shift.

Wendy’s isn’t the only mega-chain getting in on the trend. McDonald’s (MCD) has also dabbled with dynamic pricing. But notably, McDonald’s experiment led to customer backlash, with some arguing inconsistent pricing and lack of affordability run counter to the appeal of fast food.

If dynamic pricing helps drive sales for Wendy’s, other chains may follow its lead. But there’s a reason many restaurants have historically been hesitant to change beloved recipes.

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