How A Consumer Revolt Forced Wendy's To Give Up Surge Pricing Plan

Economists like surge or dynamic pricing because it is 'efficient,' as it matches demand with cost, thereby creating a theoretically beneficial allocation of resources. 

Beneficial to whom, of course, is the question. Wendy's CEO announced the idea in an earnings call with investors, who generally applaud new ways of making money. Consumers of fast food, though, already beset by higher food prices, weren't as pleased. They took to various internet forums to complain that this was price gauging and threatened to take their business elsewhere. Wendy's quickly issued a retraction, claiming their plan had been 'misinterpreted' - demonstrating another axiom of economics, which is that the market rules. JL

Maxwell Zeff reports in Gizmodo:

Wendy’s CEO told shareholders it would “begin testing enhanced features like dynamic pricing,” less than two weeks ago. Dynamic pricing is a strategy used by Uber, Ticketmaster, airlines and other businesses to offer fluid prices. The surge in prices during increased demand is a key element of this. Mainstream media then ran stories about Wendy’s plans. Customers expressed outrage about Wendy’s new pricing strategy on social media, suggesting that ordering from Wendy’s would be like trading stocks. Dynamic pricing “can cause a customer revolt. Dynamic pricing is price gauging, and consumers are fed up.” Wendy’s clarified in an updated statement that it has “no plans” for surge pricing.

The internet had its own never-frozen beef with Wendy’s when it discovered the fast food chain was planning surge pricing for 2025. Wendy’s clarified in an updated statement on Tuesday night that it has “no plans” for surge pricing.

“We said these menu boards would give us more flexibility to change the display of featured items. This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants,” said Wendy’s in an updated official statement. “We have no plans to do that and would not raise prices when our customers are visiting us most.”

 

To be clear, Wendy’s CEO told shareholders it would “begin testing more enhanced features like dynamic pricing,” less than two weeks ago on its earnings call. Dynamic pricing is a strategy used by Uber, Ticketmaster, and other internet-native businesses to offer fluid prices. As anyone who has used these services understands, the surge in prices during increased demand is a key element of this practice. However, Wendy’s now claims that was never part of their version of dynamic pricing.

Several mainstream outlets, including Gizmodo, The Washington Post, and the Associated Press, ran stories about Wendy’s plans for surge pricing. Customers expressed outrage about Wendy’s new pricing strategy in the last two days on social media, including memes that suggest ordering from Wendy’s would be like trading on the stock market.

“Imagine standing in line and watching the price of a Frostee increase by $2 as soon as you get to the register,” said one user on X.“When you short Wendy’s before the lunch rush,” said another.

“Dynamic pricing is basically price gauging, and consumers are fed up,” said one user.

In an earlier statement, Wendy’s noted that menu items would get cheaper during slow times of the day. This is another feature of dynamic pricing, like when hotel prices drop during the middle of the week. However, the company did not clarify that surge pricing would not occur in this earlier statement to Gizmodo.

Business.com notes that dynamic pricing “can cause a customer revolt.” It’s the reason Taylor Swift fans were outraged when concert tickets reached unthinkable prices during The Eras Tour. “If customers are confused or feel taken advantage of by fluctuating prices, they may opt to purchase from a competitor with fixed pricing.”Though dynamic pricing is a common feature in many internet businesses, many consumers consider it to be an unfair practice. Thankfully, it appears Wendy’s will not be charging extra for Baconators during the lunch rush.