DUBLIN, Ohio — Wendy's restaurants plan to test price increases on their menu next year, meaning the prices of items will fluctuate throughout the day based on demand.
Wendy's CEO Kirk Tanner said earlier this month that the Dublin, Ohio-based fast-food chain would begin testing dynamic pricing, also known as surge pricing, as early as next year, the Associated Press reports. The chain plans to invest around $20 million by the end of 2025 to introduce digital menu boards in all of its restaurants in the United States.
Dynamic pricing, in which fees increase based on demand, is widely used by ride-hailing companies and also by services that sell tickets to concerts and sporting events, the Washington Post reports. It can save consumers money when shopping during off-peak times, but can lead to significantly higher costs when demand increases.
“Like it or not, these are 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 industry is much more competitive.”
CNN reports that McDonald's has been testing dynamic pricing in some locations, but it hasn't been well received by customers.
“The idea that a restaurant chain might raise prices at peak times, even if consumers believe they are raising prices, could lead to a backlash,” says Jonathan Maze, editor-in-chief of the trade publication Restaurant Business. tells CNN. “You have to proceed carefully. That’s why we didn’t see much of it.”
But Webb tells USA Today that Wendy's customers shouldn't expect large fluctuations in the price of its food, even during peak times.
“A flight doesn’t cost like $200 or $300. This is an extremely competitive industry. If Wendy's increased the price of a burger for dinner by $2 to $3, I would be shocked,” Webb said. “People have too many options. You just walk down the street and eat at Burger King instead. There will only be minor price changes here.”