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Your next meal at Wendy’s could be more expensive or cheaper, depending on what time you place the order.
During a February earnings call, Kirk Tanner, Wendy’s CEO and President, announced that the company will invest about $20 million into digital menus at all U.S. company-operated restaurants and begin testing dynamic pricing by 2025.
Dynamic pricing is described as “product pricing based on various external factors, including current market demand, the season, supply changes and price bounding,” according to Business.com.
“With dynamic pricing, product prices continuously adjust – sometimes in minutes – in response to real-time supply and demand.”
Simply put, prices for menu items like burgers, sides and drinks will often fluctuate with the new product pricing structure.
Companies like Target, Walmart, Amazon, and Uber have implemented similar practices.
“Wendy’s foray into dynamic pricing is a bold experiment that could help the chain be more efficient and ultimately profitable if it works, ” Caleb Silver, editor-in-chief of Investopedia, told Food & Wine.
“But it does run the risk of angering and losing customers since they actually have many choices, unlike the rideshare industry.”
Tanner also stated that other features like “daypart offerings, AI-enabled menu changes and suggestive selling” will also be tested beginning next year. Another $10 million investment will also be allocated for digital menu enhancements.
Wendy’s new pricing structure comes after companies like Chipotle and Fatburger indicated that menu price hikes could be on the horizon, especially for California locations.
Beginning in April, fast-food employees in the Golden State could make $20 per hour thanks to a new minimum wage law.
Marcus Walberg, whose family operates four Fatburger restaurants in Los Angeles, told Business Insider that he sees no option but to raise prices and make other changes to adapt.
In November, Chipotle announced it would raise prices by a “mid-to-high single-digit” percentage in California.
As for Wendy’s, Tanner didn’t disclose an exact date for when the new dynamic pricing tests would begin.
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