Wendy's plans to begin surge-pricing at restaurants
HOUSTON - The Wendy's restaurant chain has confirmed it will begin testing 'surge-pricing', where menu items could get more expensive at popular times of day. The concept is not new, and it already happens in other industries. Now, some restaurants are clearly thinking, 'Why not us?'
Wendy's is the nation's number-two burger chain in sales. Company leadership is looking for more, with plans to capitalize on times when hunger strikes hardest. Plans to introduce so-called 'dynamic pricing' would make food prices fluctuate during the day.
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For example, in Houston, a Wendy's single with cheese runs $5.69. Buy one during the lunch rush, it could be a dollar more, and maybe a dollar less during the slow part of the day.
They're not alone. Dynamic pricing is already standard in concerts, air-travel, hotels, and rideshares like Uber. For the fast food segment, tight profit margins can lead to creative ways to boost the bottom line. Potential customers might be agreeable.
"If I liked it, I'd pay for it," says one man. "A couple dollars, here or there, is not an issue."
But there's a greater risk of turning off customers, and business experts say Wendy's competitors will be closely watching to see if there's opportunity for them.
"They will only follow suit, after a couple of quarters, and they will determine if the growth Wendy's has experienced, or lack thereof, will determine whether they chose to do the same," says UH Bauer School of Business marketing expert Paul Galvani. "Then, surge pricing becomes the norm."
A recent survey suggests an uphill battle with more than half of consumers considering dynamic pricing at restaurants to be 'price gouging'. It might help explain why social media reaction has not been kind to Wendy's plans.
For now, though, the company CEO says they expect to move forward by 2025.