Fast food restaurant Wendy’s plans Uber-like surge pricing, with digital menu boards that change prices depending on demand::The price of a Wendy’s Frosty could soon fluctuate throughout the day as the chain looks to introduce Uber-like surge pricing on its menu.
God damn this is ridiculous. People need to read the transcripts it’s not surge pricing.
I haven’t read the transcript of the earnings call, but I read the article(s) and the Wendy’s blog post in response.
It seems like there was indeed some misunderstanding somewhere along the way, in that the “dynamic pricing” that was referenced was not to be construed as surge pricing in any way, and was intended to reflect decreased (ebb? discounted? receding?) pricing that would be presented during off-peak hours to drive business.
The practice in itself isn’t inherently bad, but I can see this as an incremental move towards true surge pricing across the industry - which for the record I am against - and there isn’t really a way to position it in such a way as to be seen as a benefit to the consumer.
As with everything else, customers will vote for this practice with their wallets, and by the state of several other industries in which similar models have been adopted and begrudgingly accepted as the norm, I’m not holding out a lot of hope for a positive outcome here.
What are you talking about? Just because they aren’t calling it “surge” doesn’t mean it’s not surge. Unless you’re just saying you prefer the term “gouging”?
In a statement Wednesday, Wendy’s clarified that “dynamic pricing” will include new menus that could offer discounts at slower times of the day, denying the company will raise prices during peak demand.
Lowering prices, also known as “discounts,” and then restoring prices after the “discount” can be understood in reverse: prices go from “normal” to “increased”.
Given the fact that they (like every other fast food company) always charge the absolute maximum the market will bear, then any price – even a reduced one – is still going to be what they calculate to be the maximum. The fact that the maximum is different at times of “increased demand” is exactly what surge pricing is.
Well dynamic pricing and surge pricing in practice are the opposite. Both raise prices.
Surge pricing raises it on peak times while dynamic does it throughout the day and usually during off-peak times to subsidize on peak times.
Surge pricing is vastly different than dynamic pricing. Surge pricing has not chance of working in retail when competition exists.
Dynamic pricing is done in retail already and no one bats an eye at it.
Tesla does dynamic pricing. Fuel stations do dynamic pricing.
Energy companies do surge pricing. Uber does surge pricing.
When there’s a monopoly on a market you wouldn’t do dynamic pricing.
But also it’s why heavy regulation is done.
Uber broke this model because they get to operate as a monopoly while gouging their customers.
I’m not defending Wendy’s but as someone in pricing this is a vastly different thing and is 100 times worse than dynamic pricing.
I get what you’re saying, but it honestly sounds like kool aid drinking. “Surge” vs “dynamic” might be different in terms of back end calculation, but the external appearance is the same.
Again, you have to remember that prices are still maxed out. Think about it this way: if you normally wear 2000 calories a day, and every now and then you have an extra donut or burger and that puts you at 2500, that’s only balanced if, on other days, you have only 1500 calories. If the only exceptions are in the “plus” direction, the average is up.
Dynamic pricing is done in retail already and no one bats an eye at it.
Don’t mistake prior not knowing about it for people saying they think it’s ok. If this is happening in retail, and people knew, they wouldn’t be happy.
Surge pricing is toxic and needs to stop.
External appearance is not the same for both. Elasticity of demand during seasonal time of day and weekday seasonality proves it
People don’t like surge pricing with Uber but they have no choice there’s really no competition. Lyft is the only one so they both do it.
Dynamic pricing is done because of lack of pricing power and monopoly. Most restaurants are franchises. You can’t get franchisees to exhibit monopoly power because they compete amongst themselves in the same brand and vs others. Aside from the fact that it’s illegal.
I’m not saying it’s good just totally not the same.
Dynamic pricing is sneaky and hard to pay attention to. Surge pricing isn’t.
Dynamic pricing allows competition at certain times but screws over people that don’t buy into loyalty cards rewards points or just doesn’t go to the store when everyone else does.
I’m literally the customer that gets punished.
Companies don’t care about customers unless elasticity is proven. They will test elasticity until net margin is maxed out at optimal volume. It’s why Netflix doesn’t give a shit about raising prices. When done in chunks and averaged over time people continue to pay.
Whereas when it’s done in large quantities it has bigger effect on prompt demand.
Fuel stations will raise prices at odd peak times when people that don’t “shop” for fuel get fuel. Then they ramp it down just before peak times.
If customers have loyalty or rewards they typically will be free of these issues because of timed promotions but mostly these prices are inelastic at those times. Which proves that those people don’t care.
These things are like anything else. The loudest people make noise. consumers don’t stop their habits easily unless they feel they don’t have a choice. Hence why surge pricing wouldn’t work in retail.
I’ve worked in retail operations, pricing, and manage/execute machine learning for these projects. You can try to explain it to me and why you think it’s the same but respectfully you’re just patently wrong.
If people actually knew the difference they could look for it but they won’t if everyone just says it’s all the same and mislabels it. People should be looking out for dynamic pricing. Surge pricing doesn’t exist in retail and won’t in the US market.
You’re 100 percent right and to go even further that dude must be naive if he thinks they won’t use it to squeeze as much profit as they can.
I might be ok with this if they also had “ebb” pricing. If I could walk in at 8pm and get a burger for a buck, it might be worth it never to go at lunchtime again.
This, of course, will never happen.
Also, does that mean the worker’s pay also scales along with the prices?
Hahahahahahahaha
No
An extra $0.25/hr during peak. Which of course is done by subtracting the $0.25/hr from the base and adding it back during peak.
No, but we’ll be expected to leave larger tips.
… tips? Yall tip at fast food places?
My local Wendys is busy often.
This just means I’ll never go. Let alone… Pretend I might?
Guess I’ll buy puts on WEN.
I could see something like this being useful if it was keyed to stock they needed to get rid of. Like they have extra chili or salads, so they temporarily drop in price. They would waste less food which would make them more money, but of course that’s not how it’s being used…
There’s an app called to good to go. Check it out I use it often.
Maybe workers would be able to upcharge rude customers, at least.
I feel like this would only work if all the other fast food places did the same thing… please, please don’t do that! Seriously, if it’s peak time like lunch, why would I ever pick Wendy’s, which is now super expensive, or just get shitty food from the other place a block away for half the price?
Also, it’s going to be even more insulting when they no longer offer the cheapest items they have today, which I will assume will never be this low again, even at low points of the day. I really hope this campaign is a huge failure and the people who pitched it are fired because I really don’t want to see a future where this is possibly the standard one day.
there’s a lesson that I learned in college that I still follow today: never eat lunch at lunchtime. unless I’m traveling I’m not eating at peak periods anyway so I really wouldn’t be affected by this pricing change.
I still don’t like it though. unless that wendy’s is the only game in town (literally) this isn’t going to be good for business.
What do you mean when you say you “learned” to not eat lunch at lunchtime? We’re you punished?
Getting lunch at 12:30: long lines, long wait times, too many people, waste most of your break time.
Getting lunch at 11:30: short lines, get food quickly, avoid the crowd, eat sandwich at a park and enjoy the sunshine.
There is no way this would hold up in my country if they are advertising prices and you get there and the price is more from a legal perspective. They would not be able to advertise if they did this. Also we don’t have Wendy’s…
Sure they can “Wendy’s lunch menu, up to X” or “Wendy’s night snack, as low as Y”
I imagine it’d be handled kind of like how McDonald’s “1,2,3 Dollar menu” doesn’t have a single item under 2 dollars in my area.
Good thing Wendy’s announced this today so I can ignore them forever
No seriously how do they recover from this
They recover by everyone else realizing there’s profits to be made, and following suit. Once greedy corpo assholes come up with an idea to fuck the consumers harder, there’s usually no going back. Hopefully I’m just being cynical.
I can’t wait to be strongly incentevised not to eat out
Imma save so much money
There’s a lot of talk about the backlash making them go back on their decision, and how stockholders weren’t happy seeing the consequences, but I’m wondering how many people actually went to a Wendy’s just to be nosey and ended up buying something because prices hadn’t changed and they were already there, and how many more people will go now that they know prices won’t fluctuate at all.
It almost feels like this helped them just by having people talk about it.
Their twitter guy would’ve been pretty funny with this whole thing.
Who’s gonna go to a restaurant where they never know how much it’s going to cost? Stupid idea.
Apparently the backlash was strong enough, that they have announced that they have “abandoned the idea.”
https://www.bbc.com/news/business-68427039
I suspect they’re just going to stick it in a drawer and try again in a couple years, without a massive announcement beforehand
Maybe they also looked at how much it would cost to update every Wendy’s with digital signage when they barely have enough money to staff the stores.
Oh. They have the money. They just don’t want to spend any of “their” profits.
They will still do it as planned. They were morons for bragging about it. Papa john’s already let’s you pay like $2 or $3 during peak to have your delivery bumped to the top of the list. But they sold that as a feature Wendy’s isn’t offering you anything but the chance to get fucked over.
And just like that any (s)urge I had to go there ebbed and disappeared.
My thoughts exactly.
Though I rarely eat fast food already, this will be yet another reason not to.
Great, I cannot wait for not eating it there, like I always do.
Imagine sitting in front of stock like ticker menu. Wife yelling BUY LOW, and you watching the cents drop.
I saw that post yesterday actually. It was a cartoon posted somewhere here.
Oh! That’s what it was about. Thank you.
