Wendy's says surge pricing reports were "misconstrued" after internet turns Frosty

Cal Jeffrey

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Staff member
Editor's take: Thanks for all your comments on our last article about Wendy's surge-pricing plans. Although the company said we "misconstrued" the CEO's words, the restaurant chain has heard your voice and will not be introducing the demand-based pricing technique after all. Instead, you can look forward to lower prices during off-peak hours, or so the company said in a revised statement. We apologize for any confusion.

On February 15, Wendy's hosted a Q4 2023 earnings call for investors. During the 53-minute slide presentation, Chief Executive Kirk Tanner mentioned that the company would start testing "dynamic pricing" in 2025.

Dynamic pricing is commonly used and understood to mean the same as surge pricing. So when the media got wind of the plan and reported on it, the internet immediately went into a frenzy, with stories going viral within 24 hours of posting. Of course, the uproar kicked Wendy's public relations machine into high gear.

On Wednesday, Wendy's released a statement denying its plans to introduce surge pricing, adding that the media misconstrued what Tanner and the company's slide presentation said.

"We said these menuboards [sic] would give us more flexibility to change the display of featured items," the company clarified. "This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants. We have no plans to do that and would not raise prices when our customers are visiting us most."

It added that the digital menu boards could allow it to easily make "value offers" during off-peak times. In other words, it is suggesting the opposite of surge pricing.

While Tanner did say that the menus would allow them to change offerings throughout the day, he mentioned dynamic pricing in the same breath without clarifying it further. For the sake of transparency, here is what the CEO said during the conference call in its full context:

"We are planning to invest approximately $20 million to roll out digital menu boards to all US company-operated restaurants by the end of 2025 and approximately $10 million over the next two years to support digital menu board enhancements ... beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day-part offerings, along with AI-enabled menu changes and suggestive selling."

Tanner continues talking about the company's commitment to using generative AI to increase profits and growth by improving order speed, accuracy, and customer satisfaction without clarifying what he meant by "dynamic pricing." Since the term has frequently been used interchangeably with surge pricing – the practice of increasing prices during times of high demand – clarification was necessary if that is not what Wendy's intended.

The company's tone in explaining the matter – specifically blaming the media for misconstruing its statements – is just as likely to upset people even more. Pointing fingers is never a good look. It tends to make one look guilty. A better tact would have been to take responsibility for the misunderstanding.

Saying, "Look we messed up in our presentation in using the term 'dynamic pricing,'" then clarifying that they intended to lower prices rather than increase them would have earned the public's respect. An even better approach would have been telling the public, "Hey, we heard your voice and have canceled plans for dynamic pricing because we care about your opinions." People love validation, and this would have gone a long way in mending public perception. Deflecting blame and pointing fingers has the opposite effect.

In any event, know that Wendy's will not gouge you on your burger just because the drive-thru line goes down the street. Instead, plan your dining experience earlier in the day or slam them when they are about to close if you are looking for a Baconator on the cheap. Workers love that.

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Yeah, that "clarification" still doesn't help. Because it just sounds like they'll jack up the prices, and "lower" them to pre-increase prices while pretending that it's actually saving you money off peak.

They're in the business of making money, it will be abused if implemented regardless of how they spin it.

And how dare people point out what your intentions actually were lol
 
Yeah, that "clarification" still doesn't help. Because it just sounds like they'll jack up the prices, and "lower" them to pre-increase prices while pretending that it's actually saving you money.

They're in the business of making money, it will be abused if implemented regardless of how they spin it.

And how dare people point out what your intentions actually were lol
This is in the middle of other fast-food chains saying that they're losing business because of their high prices and they are going to start working on value items.
 
Corporate communications at its finest. When corporate uses vague terms and fluffy plans without explaining what they really mean, people have no choice but to fill in the gaps.

And fill in the gaps we have! Probably with what they were really planning from the get-go, but now that there's a big backlash (not to mention legislation has been proposed in response to this) they definitely won't do surge pricing.
 
I think reporters should have clarified with the company what it meant by "dynamic pricing" in the first place, BEFORE reporting to the public.

Anyway, we will never know what that dynamic pricing meant. If we believe the media, the company is evil, and if we believe the company, the media misconstrued it or flamed it.

In the end, logically speaking, a fastfood chain would not commit suicide by going the demand-supply route. It's a given and no CEO will be dumb enough to do it. This is different from transport business.
 
I think reporters should have clarified with the company what it meant by "dynamic pricing" in the first place, BEFORE reporting to the public.

Anyway, we will never know what that dynamic pricing meant. If we believe the media, the company is evil, and if we believe the company, the media misconstrued it or flamed it.

In the end, logically speaking, a fastfood chain would not commit suicide by going the demand-supply route. It's a given and no CEO will be dumb enough to do it. This is different from transport business.
It is possible that both the company and the media is evil. I do believe that this was a way for wendys to make more money as these companies keep reporting record profits and they're running out of ways to keep increasing profit. At the end of the day, Wendy's is just a fast food burger chain. They aren't some some revolutionary startup where their stock prices double every year for 20 years. There are only so many hungry people and many of those hungry people are only willing to pay so much. Realisticly, I'm not willing to spend more than $20/day on food. If you would have asked me pre covid, I was eating pretty good on $10/day.

I recently did an experiment to see what the minimum I could sustainably eat on and it was about $5/day with mostly eggs, beans and rice.
 
I still don't understand how price reductions you can not know about until you're already in the restaurant, or partly through the drive in line, can spur any extra demand when volume is low. Whereas advertising "we charge a lot less at 3pm" can and does do that though.

And I also don't understand how price increases are going to help anyone. Uber uses the surge pricing to alert drivers that now is an excellent time to get in the car and drive for extra pay, and the bonus incentive does result in extra supply. Wendy's can't add extra seats or drive thru lanes, so it's just a price increase, but handled in the worst way possible. If consumers don't understand what's going on, most aren't going to keep coming back to hope it's a better price next time. They'll just assume your prices are unattractive and shop elsewhere.
 
It's bad food so let them charge the nutritionally deprived whatever they want. I hope they are wearing their Samsung Galaxy ring when ordering.
 
I think reporters should have clarified with the company what it meant by "dynamic pricing" in the first place, BEFORE reporting to the public.

Anyway, we will never know what that dynamic pricing meant. If we believe the media, the company is evil, and if we believe the company, the media misconstrued it or flamed it.
Sure, I would have loved for reporters to ask more and better questions on the spot. But once he said it on a public investor call, it was fair game to report immediately -- and investors and traders would likely go farther and say it was an imperative to do so.

And let's be honest, there's no actual question as to what dynamic pricing means. If his primary intent was to increase demand by lowering prices, they would have said so loud and clear. There's also no sane reason to believe this can best be done by posting such discounts on a signboard that is only visible once you're already at the restaurant.

 
It's the same "we are now showing ADs to make our products cheaper" switcheroo which leads to everything getting more expensive.

The food non-surge prices will be used to pull wool over the eyes of consumers and soon the normal prices will increase and non-surge timings will keep on shrinking....
 
Businesses only make these shady attempts because previous ones worked.
Simply because you don't like a business model doesn't make it "shady". Companies have been dynamically altering price based on demand since the dawn of time, and no amount of whining and foot stamping can change the laws of economics.

I think he was perfectly clear the first time. He just didn't like the reaction.
Actually, a horde of clickbait-seeking journalists chose to read far more into an investors call that was warranted, then neo-socialist readers chose to misconstrue it even further.

As seen in the other thread, I (and some other readers) understood immediately what was meant by Wendys' statement -- we didn't need this "clarification". Why did you?

If his primary intent was to increase demand by lowering prices, they would have said so
But that isn't the intent. The intent is to take their fixed quantity of demand, and spread it out over time. They're hoping to train at least some of their more price-conscious and time-flexible customers to seek non-peak periods to order. Makes sense ... and (if I ever ate at Wendys) it would benefit me too, by reducing peak demand.
 
So by manipulating the customer to "spread the load" is good for the company because they won't have to hire more staff to cover peaks in demand. Chase that dollar, team. Chase that dollar.
 
Will that also translate to employees getting lower wages on low demand periods?
That would make food scalping a viable new bussiness model :)
 
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