Most businesses have been practicing Surge pricing due to ongoing demand. Uber and some other companies use this method to increase prices when demand is high.
Some months back, Wendy’s faced a similar controversy over the price rise. It created a massive confusion among consumers about the price hike at Wendy’s restaurant. Let us discuss the surge pricing in detail and Wendy’s dynamic pricing case.
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News of February 2024
In February 2024, the news spread in the media that Wendy’s was planning to keep the different prices for food items at various times of the day. This method is often used by airlines and other companies like Uber during the high demand. The multiple headlines were flashed on TV, social media sites, and other platforms such as “Wendy’s to adopt Uber-style surge pricing and #BoycottWendy’s and so on.
This news soon offered a chance for Wendy’s rivals to increase sales by maintaining the same price.
Meanwhile, Wendy’s stated that it wanted to keep prices the same during high demand but reduce them when sales were low. To justify this, Wendy’s introduced a one-month burger deal of $1.
Announcement of Wendy’s New President
Wendy’s CEO and new President, Kirk Tanner, announced several plans for the company’s future. He stated that the company will soon test dynamic pricing and AI features by the year 2025.
Many people misinterpreted this statement. Consumers believed that Wendy’s would soon introduce a surge pricing method. The CEO’s statement created confusion. Although surge pricing and dynamic pricing might sound similar, they are still different.
Surge pricing increases prices during high demand. On the other hand, dynamic pricing allows prices to fluctuate.
Wendy’s executives clarified that the restaurant will not increase prices under a dynamic pricing model. It said that the upper limit is the current price.
Dynamic pricing is not a new method.
The term dynamic pricing is often related to costly goods and services. It is frequently used in event management companies and airlines where customers are used to paying high prices. Fast food is a daily convenience item, and dynamic pricing cannot be expected in this sector.
This method is quite popular in the hospitality and travel industries due to high demand. It is also used in several sporting events and concerts when there is high demand.
Is dynamic pricing beneficial for the business?
Yes, Dynamic Pricing offers many benefits, such as:
- Gives a better customer experience
- Reduces prices during low demand for products
- Encourages the customers to buy more products
- Helps the business to adapt to the market changes and preferences of the customers
- It helps in getting better inventory management
- It helps the firms to increase sales when the demand for the products is high or low
- Helps the businesses to boost revenue and adjust prices according to the demand and competition level in the market
What should businesses do?
A recent example of Wendy’s restaurant shows that a few wrong words might confuse consumers. Companies must choose their words wisely and practice effective communication to give their customers the correct information.
Since dynamic pricing is a popular concept in many industries, companies must explain their pricing strategies precisely to avoid confusion and maintain the business’s reputation worldwide.
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