Wendy's will experiment with dynamic surge pricing for food in 2025

https://arstechnica.com/information-technology/2024/02/wendys-plans-ai-powered-menu-to-change-food-prices-based-on-demand-weather/

by Bender • 2 years ago

29 79 2 years ago

arstechnica.com

kragen• 2 years ago

price discrimination can go much further than surge pricing! i wonder if they'll also experiment with special discounts (or exemption from the surge pricing) for people who recently ate at mcdonald's, haven't eaten recently at wendy's, are carrying cheap brands of cellphone, have not recently taken uber, live in a poor neighborhood, or shop at discount stores? and if someone eats at wendy's more than twice a week or habitually orders especially addictive items, you could raise the prices you charge them. you could even disingenuously claim that you're trying to protect your customers' health by preventing them from overeating

here in buenos aires there's apparently a law requiring restaurants to post prices for all their menu items, so in additional to the 'digital menuboards' in all the fast food restaurants, there's always a laser-printer printout in 10-point type on the wall which lists many food items that rarely or never appear on the digital menuboards, such as hamburgers without fries and drinks. so, unless that law goes away, they would have to cloak such price discrimination as discounts, maybe discounts for coming in at off-peak hours ('happy hour', as several people have referred to in this thread—though if alcohol-induced impairment of your consciousness tends to make you happy, i think something is very wrong with the way you're living the rest of your life)

for the most part, privacy is a public good rather than a private one; the benefits to privacy flow to society in general rather than the individual whose privacy is protected. price discrimination is an exception to that general rule, but biometrics make it impossible to preserve your privacy in wendy's; you can't order food there without exposing your voiceprint, your irises, and usually your face

chris_wot• 2 years ago

Wendy’s can go screw thrmselves.

aurizon• 2 years ago

Wendy's is:-

bdw52042• 2 years ago

This is not going to be well-received by their customers and is likely to send business to McDonald's and Burger King instead.

They also really shouldn't be doing "suggestive selling" whether with humans or machines. Just shut up and take the customer's order rather than trying to talk them into ordering something. Nobody likes when stores or restaurants do that even if it "increases metrics" because some people choose to buy the item being aggressively pushed. What you don't see are all of the people who go somewhere else to avoid having to deal with that.

sokoloff• 2 years ago

"I'd like to buy some fast food at a reasonable and predictable price."

"Sir, this is a Wendy's."

dylan6043• 2 years ago

I know where your funny is aimed, but I would say the joke stands on its own if left off at food

ethbr14• 2 years ago

Ironically, Wendy's was the first of the major chains to have a value menu (aka dollar menu), in 1989.

dahart3• 2 years ago

likely to send business to McDonalds

Wendy’s is doing this in order to compete with McDonalds, which has been pushing up prices much faster than inflation for several years in a row… and McDonalds has publicly claimed it’s not hurting their business.

https://www.businessinsider.com/mcdonalds-price-hikes-puttin...

nimbius• 2 years ago

McDonalds has every incentive to insist to its shareholders that price increases do not impact business performance. any onlooker --even Wendy herself-- who thinks otherwise is deluded.

McDonalds is routinely lambasted on social media and in memes for its recently gilded pricing. the quality just is not there. I suspect actual sales are flat, or in decline as a response to the price increase.

The alternative to scalding a frog is a world where corporations occasionally have to suffer the consequences of inflation as well as consumers.

nsxwolf• 2 years ago

I used to eat fast food multiple times per week. Now it's once a month, tops. It's just so expensive.

It's crazy to me to think that no one else out there thinks like me? That these companies can just confidently do this and succeed doing it?

CooCooCaCha• 2 years ago

My pessimistic take is this wont drive significant business to competitors and will slowly become the new standard because of the profit potential. Basically, enshittification.

spacecadet2• 2 years ago

Full on enshittification

adolph• 2 years ago

Just shut up and take the customer's order rather than trying to talk them into ordering something.

Would you like fries with that?

Are you interested in the catch of the day?

May I suggest a wine to pair with that?

Unlimited breadsticks!

cogogo2• 2 years ago

Might attract people who want to go there in off hours when the food is cheap and could be marketed that way. It’s interesting because they could definitely change the pricing algorithm dynamically as they see changes in customer behavior and impacts on revenue.

oldnetguy• 2 years ago

I don't think Wendy's is good enough to warrant paying extra for. If their prices increase I would rather just eat somewhere else.

jqpabc1232• 2 years ago

One of my favorite alternative restaurants is Red Bowl.

They are a regional chain that offers a sit-down meal with service for about the same price as fast food nowadays. And it is far better from a health perspective.

https://www.redbowlwaldwicknj.com/

bearjaws• 2 years ago

And of course the price minimum will be what we pay today, it will only get more expensive.

aerotwelve• 2 years ago

Will they increase the pay of the employees who work during the surge periods proportionally to the size of the price increase?

HumblyTossed2• 2 years ago

We all know they won't.

SketchySeaBeast4• 2 years ago

It'll probably instead be used to dynamically start and end people's shifts, as tightly as labour laws allow.

swarnie• 2 years ago

Depends, can they staff the shift without doing that?

If yes, no.

james_pm• 2 years ago

Wait until they realize that they can tie this AI into facial recognition at those big screen kiosks and they change the prices based on the appearance of the person ordering.

HumblyTossed2• 2 years ago

Wait until they tie it to the actual person because they know this person will pay whatever.

LudwigNagasena• 2 years ago

That's very illegal. You can only discriminate based on the appearance if you are doing enterprise sales.

westmeal• 2 years ago

I used to like wendys like 5 years ago

blakesterz• 2 years ago

   "Dynamic pricing can allow Wendy's to be competitive and flexible with pricing, motivate customers to visit and provide them with the food they love at a great value. We will test a number of features that we think will provide an enhanced customer and crew experience."

So I guess that means somethings things will cost most and sometimes things will cost less? I would hope there's something on those digital signs that calls out the pricing.

"THIS BURGER IS 25% MORE THAN NORMAL!" or "25% OFF YOUR FROSTY BECAUSE IT'S SNOWING!"

Hopefully there's some way to escape the line after you notice that your fries are going to cost $15 because there's a long line.

ChumpGPT• 2 years ago

If you at all care for your health, then you won't need to escape the line.

jqpabc1232• 2 years ago

And consumers can experiment with eating elsewhere.

This is a good example of dystopian capitalism run amok.

Next logical step --- they track those that fall for this and start charging them "surge" prices all the time. Then some accountant gets the bright idea that they can sell their "sucker list" to other like minded establishments.

And soon these "suckers" will find themselves branded for life. Where ever they go, they will be charged more.

lebean• 2 years ago

Sir, this is a Wendy's.

dylan6043• 2 years ago

That app you've been using to buy this "food" that now tags you as a gullible surge friendly customer can/will be sold to other vendors who can then silently roll our their own surge pricing to those same customers. It's like a lame Black Mirror subplot

taco_emoji• 2 years ago

Keep reading this everywhere, and it's 100% a publicity stunt perpetuated by gullible journalists.

RankingMember• 2 years ago

Bingo- this isn't going to last but the brand will be in peoples' brains and they'll book some extra business from that before quietly shelving it.

dylan6043• 2 years ago

I was expecting The Onion tag line somewhere

coding123• 2 years ago

We just did this one

newsclues• 2 years ago

I think a lot of people will complain, but most of the clientele won't change their spending habits before other companies follow this trend.

aqme28• 2 years ago

It seems insane to me to market this as "the food costs extra at certain times of day" rather than "Happy Hour-- 20% off!"

vidanay• 2 years ago

It costs 25% extra for 23 hours - et voilà, Happy Hour!

scoofy• 2 years ago

I actually think there is an important difference.

Happy hours are designed to increase demand.

Surge pricing is designed to capture some of the value that high demand loses to limited supply.

I agree with your framing, but 20 hours of happy hour is a tough sell for PR, but worth getting right.

I also disagree with everyone here saying people will just go to an alternative restaurant, when the entire point is that all the drive thru’s are already full during these periods.

JB_Dev• 2 years ago

This has been described as similar to Uber/Lyft surging but it’s different in a few critical ways that I suspect consumers are less tolerant of.

When Uber/Lyft are surging it incentivise more drivers to go to the surge area. This raises supply and the surge rate decreases. Drivers are distributed automatically where they are needed. Overall trips taken should be higher compared with a no surging model. So it shifts both the demand (higher ride price) and the supply curves dynamically. That’s an easier model to market to customers as there is at least some logical sense behind it.

However in Wendys case dynamic pricing has no effect on supply. It just modifies the demand curve.

Fundamentally they are betting that their food demand is inelastic enough that they’ll make more money overall. That just feels more exploitative and is going to be harder to market.

lawlessone2• 2 years ago

Fundamentally they are betting that their food demand is inelastic enough that they’ll make more money overall. That just feels more exploitative and is going to be harder to market.

To be fair I think it's less exploitive than Ubers prices surging during a terror attack..

mildchalupa• 2 years ago

This is a wild proposition. Were taxis running directly after 9/11?

This is sort of a problem if a society depends on them as a piece of critical infrastructure. If a city owns a bus route and needs to evacuate a population, they can just do it by edict.

No one is considering this edge case and how it should be handled at Uber. A company or community that has pride in what they offer would probably provide rides for free during such an anomaly. This is a drawback on the scalability of technology as we currently implement it.

SketchySeaBeast4• 2 years ago

Fundamentally they are betting that their food demand is inelastic enough that they’ll make more money overall. That just feels more exploitative and is going to be harder to market.

Yeah, I have no idea how they can sell this to the consumer. I have to pay more for food at supper time? Why would I want to pay for that? You're asking me to eat earlier or later to soften the demand curve, but why am I choosing fast food if I don't want convenience?

Ajay-p2• 2 years ago

When Uber/Lyft are surging it incentivise more drivers to go to the surge area.

Or.. it incentivizes drivers to create surge conditions so they can make more money.

https://www.businessinsider.com/uber-drivers-artificially-tr...

deviantbit• 2 years ago

They're about to test demand elasticity and find out. People are going to go elsewhere. For demand-based pricing to work the price has to be allowed go to zero or near zero. They're not going to do that. This has to be another Ivy League graduate's idea that only took one economics course. This is going to really anger people. I think I might buy puts on WEN.

johnny99k• 2 years ago

It sounds like a new c-level executive just got hired and found a 'great way to increase profits'.

spacecadet2• 2 years ago

Are they going to pay their employees more during surge? I worked food industry as a teenager with a stint in fast food- it can be crazy, you get physically and mentally tired, from both moving quickly but from the increased number of angry customers. Hazard pay!

lawlessone2• 2 years ago

I've done two stints of working in supermarkets. Once during college 2007-2011 then later 2021-2023.

Customers are far worse now. Glad i'm out of it again because it's a lot harder to put up with the treatment once you've worked in anything else.

ethbr14• 2 years ago

Hot take -- good!

Labor is a huge component of food costs.

Labor cost per menu item is directly dependent on sales per time unit, as the labor has to be staffed regardless of sales.

Ergo, food at low-volume times (late night) should cost more.

PS: It's not as if airlines, online retail, etc. aren't already doing this. I find it hard to get outraged that one industry is different than others.

SketchySeaBeast4• 2 years ago

I don't think there's a single restaurant on the planet with a line that runs with the same labour cost at 11 PM as they do at 6 PM.

ethbr14• 2 years ago

You're missing the point. It's normalized against sales volume.

So it doesn't matter if the late night restaurant is quarter-staffed, if they only do a tenth of the sales volume.

bryanlarsen6• 2 years ago

During surge periods restaurants redirect customers all the time.

"We're sorry, there's a 15 minute delay for hamburgers; are you OK waiting or would you prefer to order something else".

Also:

"Happy hour pricing".

As long as they have a somewhat reasonable fixed maximum price I suspect consumers will accept this quite well. Then it wouldn't be much different than dynamic happy hour pricing or any of the many other types of sale pricing that other stores run.

And it's not much different from what McDonald's is doing. The pricing for walk in customers at McDonald's has gotten horrendous. Yet if you use their app you can pretty much always find a coupon to get a more reasonable price. McDonald's would get a good reception if those more reasonable prices were also available in store during off-peak hours.

passwordoops3• 2 years ago

Your two redirect scenarios isn't surge pricing though, and I think run counter to the very nature of surge pricing.

In the first scenario the restaurant is reducing stress on the kitchen and the client by offering an alternative with a good reason. If the restaurant instead said "you can pay an extra $2 or wait 15 minutes", then it's comparable but I haven't run into that yet.

In the Happy Hour scenario the restaurant offers specific discounts to increase sales volume

bryanlarsen6• 2 years ago

Happy Hour is static surge pricing.

cschneid• 2 years ago

I was watching a bit of youtube this morning, and there was a wendy's ad. It ended with "All this for $5!" as the final pitch for whatever meal it was. If they do dynamic pricing, they'll cut themselves off from that kind of ad entirely right?

You (generally?) can't advertise one price, and charge a different one when the customer actually shows up.

Ajay-p2• 2 years ago

I think this is an act of desperation and will completely fail. Customers will see the higher prices during certain times and just not go there. These kinds of games are insulting to consumers and represent very narrow, bean counter mentality.

cogogo2• 2 years ago

It’s not a new idea but i’ve always “wanted” to do something similar with beer at a long bar with many many kegs of craft beer. Idea is to make sure all the product ends up moving and nothing stays untouched. Massive train station style flipping letter/number signage behind the bar with updating prices every 15-30min or something if it’s busy. One of the laundry list of reasons this is just a pipe dream is alcohol pricing like this is definitely illegal where I live.

morisy• 2 years ago

Big Board DC does this, minus the train station ticker:

https://wamu.org/story/11/11/04/inside_the_beer_and_burger_s... http://thebigboarddc.com

I could have sworn I've been to a place that does the letter flipping, but I might be misremembering. And yeah, lots of places where that wouldn't be legal.

impish9208• 2 years ago

I hope their AI chatbot offers burgers for negative dollars during periods of low demand.

barbazoo2• 2 years ago

They’ll probably just put a disclaimer underneath in tiny font.

Eventually all ads will be like ads for drugs where you have a 1 minute ad and then 3 minutes of a grandparent playing with their grandkid while someone speed reads the fine print at you.

barbazoo2• 2 years ago

Opportunity for entrepreneurs to buy low and sell high.

Especially since fast food demand appears to be much easier to predict.

Zigurd• 2 years ago

The impression I get is that this is another case of someone impressed with a tech industry practice misapplying it outside of any sensible context. I see it a lot with people using kanban boards and "sprints" when doing something very predictable, repeatable, estimable, and plannable, and a Gantt chart could easily be created for the whole project. Because the cool kids in software are doing it. "We have an app now, how about surge pricing?"

ChrisArchitect2• 2 years ago

[dupe] wasting our time OP

More discussion a few days ago: https://news.ycombinator.com/item?id=39514464

ChrisArchitect2• 2 years ago

And as OP was being submitted days late, Wendy's was busy putting out a retraction:

Wendy’s Digital News Update

https://www.wendys.com/blog/wendys-digital-news-update

lupire• 2 years ago

Wendy's refutes the "surge" verbiage. https://apnews.com/article/wendys-burger-pricing-ef75fa9214b...

Wendy's will experiment with dynamic surge pricing for food in 2025

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