Wendy's Surge Pricing Isn't What It Seems

Highlights

• Wendy's "surge pricing" was misunderstood as higher prices during peak times, but the chain claims it actually involves discounts and menu changes.
• Major news outlets covered the surge pricing story, which sparked a social media debate and led to widespread speculation.
• Wendy's addressed the viral controversy, clarifying that the dynamic pricing model is intended to benefit customers with discounts.

In late February, fast food chain Wendy's "surge pricing" plans became a popular topic in the news and on social media, after the brand mentioned a new pricing model during an earnings call.

Until the term became linked with Wendy's, "surge pricing" as a concept was largely associated with Uber (a service), versus food (a good).

Nearly every major outlet covered the story, with some publishing lengthy analyses of surge pricing in the food sector.

Wendy's dominated headlines and prompted social media debate, and this is what we know so far.

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Updated, April 2024: Discourse around Wendy's "surge pricing" continued into April, and The Atlantic profiled the controversy in a mid-April article entitled "Welcome To Pricing Hell."

In the piece, The Atlantic examined "dynamic pricing," and revisited the viral debate over rumors that Wendy's would adopt "surge pricing."

The outlet posited that the "era of the [static] price" was drawing to a close, and suggested that the practice had been quietly but widely adopted across industries:

"The battle is not just between businesses and consumers, but also between economists, who prize efficiency, and the rest of us, who care about fairness. And right now, efficiency is running away with it.

"For every Wendy’s, there are a thousand companies quietly implementing similar schemes, in an ongoing quest to get every last burger — or car, or ink cartridge, or hotel room — into every last hand, for every last penny.

"Despite the occasional outcry, the era of the single price is rapidly fading into the past. In many ways, it’s already gone."

What Is Wendy's 'Surge Pricing'?

On February 27th, the Wendy's "surge pricing" debate was the subject of a popular post to Reddit's r/news.

The post linked to an article by the Associated Press, and indicated Wendy's might introduce "surge pricing" as early as next year:

The Associated Press (AP) appears to have introduced the "surge pricing" label to Wendy's purported plans to introduce it.

The outlet used "surge pricing" in its headline, but indicated that Wendy's CEO Kirk Tanner called the model "dynamic pricing" in a February earnings call:

"During a conference call earlier this month, Wendy’s CEO Kirk Tanner said that the Dublin, Ohio-based burger chain will start testing dynamic pricing, also known as surge pricing, as early as next year.

"'Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and daypart offerings, along with AI-enabled menu changes and suggestive selling,' he said. 'As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase, further supporting sales and profit growth across the system.'"

In the article, the AP said "dynamic pricing" is "also known as surge pricing" — notably, Tanner himself only said "dynamic pricing."

What Is Surge Pricing? Commonly associated with (but not exclusive to) Uber, "surge pricing" is the practice of charging more for goods and services during periods of peak demand.

In short, Wendy's "surge pricing" could, in practice, suggest that food items would cost more during busy periods – also known as "meal times."

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Wendy's 'Surge Pricing' Isn't Exactly How It Sounds

As is often the case, news outlet after news outlet published headlines about "Wendy's surge pricing" as the story began gaining traction.

By February 28th, "Wendy's surge pricing" had become one of the most searched terms on Google.

Although the topic was widely covered, CNN pointed out something that often didn't make it into the soundbites or screenshots of articles.

In their February 27th article, the outlet indicated that almost nothing was known or confirmed about Wendy's "dynamic pricing" beyond Tanner's widely quoted statement above:

"Few details were released about the change, but Wendy’s CEO Kirk Tanner said the new menus will let the fast food chain test 'more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling.'"

CNN updated their article on February 28th to say Wendy's put out a statement "clarifying" the viral controversy (after Wendy's racked up a number of news mentions).

On February 27th, Wendy's posted a statement to their blog, with the vague title "Wendy’s Digital News Update."

The post – composed in corporate-speak – addressed the "surge pricing" controversy, and it read:

"Earlier this month we issued our fourth quarter and full year 2023 earnings results and included an update on investments we are making in our digital business. One initiative is digital menuboards, which are being added to U.S. Company-operated restaurants.

"We said these menuboards 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.

"We have no plans to do that and would not raise prices when our customers are visiting us most. Any features we may test in the future would be designed to benefit our customers and restaurant crew members.

"Digital menuboards could allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day. Wendy’s has always been about providing high-quality food at a great value, and customers can continue to expect that from our brand."

Translated to vernacular English, Wendy's said that the widely excerpted comment by Tanner was about "menu boards," not "surge pricing," and that the comment had been "misconstrued" in the news.

In addition, Wendy's stated they had "no plans to raise prices" at peak times, and intimated that the change would involve discounts, not higher prices; it was unclear why Wendy's wouldn't mention "discounts" in the earnings call.

Notably, none of the outlets offered any information on how Wendy's "surge pricing" would operate, and most reporting appeared to be speculative in nature.

In spite of the statement and alleged misconstrual, the Wendy's "surge pricing" story continues spreading, on social media and in the news.

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