Wendy's to test 'surge-pricing' menu that updates based on demand
FILE - A triple cheeseburger combo is arranged for a photograph in a Wendy's restaurant in Littleton, Colorado, U.S. (Photo by Matthew Staver/Bloomberg via Getty Images)
LOS ANGELES - Wendy's is planning to test out a new "surge-pricing" model similar to what companies like Uber and Lyft do when demand is high.
According to the New York Post, Wendy's CEO Kirk Tanner announced the new system on an investor call earlier this month, noting the company would begin testing the new pricing menu in 2025.
The Daily Mail also reported on the new pricing model, stating that based on Tanner's new plan, the chain's popular Dave's Single quarter-pound burger – currently priced at $5.95 in Los Angeles – could see as much as $1 increase during lunch rushes and could dip during slow periods.
The Post reports that Wendy's plans to rely on new digital menu boards to manage constant price shifts. During the investor call, Tanner reportedly announced a $20 million investment in new high-tech digital menus that will allow real-time price updates that change with restaurant traffic.
A Wendy's spokesperson confirmed the plan in an email to FOX TV Stations on Feb. 26.
"At Wendy’s, we’re focused on providing great tasting, fresh, high-quality food and doing it in a way that brings value to our customers. As we’ve previously shared, we are making a significant investment to accelerate our digital business. In addition to evolving our loyalty program, we are leveraging technology even more with the roll out of digital menu boards in some U.S. restaurants," the spokesperson wrote. "Beginning as early as 2025, we will begin testing a variety of enhanced features on these digital menuboards like dynamic pricing, different offerings in certain parts of the day, AI-enabled menu changes and suggestive selling based on factors such as weather. Dynamic pricing can allow Wendy's to be competitive and flexible with pricing, motivate customers to visit and provide them with the food they love at a great value. We will test a number of features that we think will provide an enhanced customer and crew experience."
The report follows moves by several fast-food franchises, including McDonald’s and Chipotle, that have already signaled an increase in prices in response to increased labor costs.
In November 2023, California approved a $20 minimum wage for fast-food workers, which has forced consumers to brace for potential price hikes in the industry.
READ MORE: California food prices could get even more expensive as fast food wages set to increase
McDonald's recently received criticism over its Big Mac combo, which is priced at nearly $18, among other menu hikes, and has promised to focus on affordability, the New York Post reported.
Meanwhile, the burger chain said it planned to pump the brakes on higher prices and focus more on value meals after seeing a drop-off in visits by some customers, The Associated Press reported.
While McDonald's reported seeing better-than-expected sales last year, price increases have weighed on customers.
McDonald’s said its U.S. traffic fell slightly as it saw fewer visits from customers with annual incomes of $45,000 or less.
Chief Financial Officer Ian Borden said the company did increase U.S. prices in the third quarter but at a lower rate. He said McDonald’s expects its U.S. prices to increase by just over 10% for the entire year.
"Inflation is starting to come down and we expect pricing to come down," Borden said during a conference call with investors.
The Associated Press contributed to this story. It was reported from Los Angeles.