DUBLIN, Ohio — Wendy’s restaurants is planning to test surge pricing with its menu next year, meaning the prices of items will fluctuate during the day based on demand.
Wendy’s CEO Kirk Tanner said earlier this month that the fast-food chain, based in Dublin, Ohio, will start testing dynamic pricing, also known as surge pricing, as early as next year, the Associated Press reports. The chain plans to invest about $20 million to launch digital menu boards at all of its U.S. company-run restaurants by the end of 2025.
Dynamic pricing, in which charges will go up based on demand, is commonly used by ride-share companies and also by services that sell tickets to concerts and sports events, the Washington Post reports. It can save consumers money if they make purchases during off-peak moments, but it can lead to significantly higher costs when demand increases.
“Whether you like to it or not, it’s the rules you have to live by,” Timothy Webb, an assistant professor of hospitality at the University of Delaware who studies dynamic pricing, tells the Post. “But the restaurant business is much more competitive.”
CNN reports that McDonald’s has tested dynamic pricing at some locations, but it hasn’t been well-received by customers.
“The idea that a restaurant chain would potentially raise prices during busy times of day, even if consumers think they’re raising prices, then it could lead to a backlash,” Jonathan Maze, editor-in-chief of trade publication Restaurant Business, tells CNN. “They’ll have to tread carefully. This is why we haven’t seen a lot of it.”
But Webb tells USA Today that Wendy’s customers shouldn’t expect to see large fluctuations in prices for its food, even during peak hours.
“It’s not like $200 or $300 on a flight. This is a hypercompetitive industry. If Wendy’s goes up $2 to $3 on a burger at dinner time, I would be shocked,” Webb said. “People have too many options. They will just walk down the street and eat at Burger King instead. There will just be little price changes here.”
