• by Tanya Gazdik , February 28, 2024

Wendy’s is walking back comments made by its CEO about its plans to implement flexible pricing. 

Initial reports compared it to “surge” pricing, or raising prices when there is peak demand, similar to how ride share companies and ticket sellers operate. 

“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,” said Wendy’s CEO Kirk Tanner during a conference call with investors. “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.”

Tanner's comment sparked an online backlash.

“U.S. Senator Elizabeth Warren, in a post on the social media platform X on Wednesday, called it ‘price gouging plain and simple,’” according to Reuters.

But a Wendy's spokesperson said it "would not raise prices when our customers are visiting us most." Instead, the company framed experimental price changes as discounts during "slower times of day.”

"We said these menuboards would give us more flexibility to change the display of featured items,” according to a statement to the media. “This was misconstrued in some media reports as an intent to raise prices when demand is highest.”

Tanner’s mistake was portraying the use of technology in a way that is only detrimental to customers and not positive. 

“While it’s natural to feel apprehensive about implementing strategic pricing, particularly given recent events like Wendy’s experience, restaurants shouldn’t let fear deter them from exploring new pricing strategies,”  according to QSR Magazine. “Negative reactions can be instructive, offering valuable insights for smarter decision-making and risk mitigation.”

Dynamic pricing could be a turning point in technology for the fast-food industry, said Jonathan Maze, editor-in-chief of trade publication Restaurant Business.

“If Wendy’s idea works it could get others to do something similar, and I wouldn’t be surprised to see another chain or two test the idea themselves, given what Wendy’s is doing,” Maze told CNN Business. 

Wendy’s will invest about $20 million to launch digital menu boards at all its U.S. company-run restaurants by the end of 2025, according to The Associated Press. It also plans to invest approximately $10 million over the next two years to support digital menu enhancements globally.

“Wendy's is not the first business to explore dynamic pricing—it's a common practice in several industries, including hospitality, retail, airline travel, and the aforementioned rideshare apps," according to Ars Technica. "Its application in the fast-food sector is largely untested, and it's uncertain how customers will react. However, a few other restaurants have tested the method and have experienced favorable results.”