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Wendy’s Is Testing an Uber-Like ‘Surge Pricing’ Model

Fast-food chains like McDonald’s have been under scrutiny lately for fluctuating prices at different locations, in which franchisees set prices however they wish.

Now, Wendy’s is taking price fluctuation to a new level and rolling out “surge pricing” — prices on menu items will change in real time based on demand.

Wendy’s CEO Kirk Tanner, who stepped into the role earlier this month, announced the “dynamic pricing” model on a call with investors Tuesday.

“As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase further, supporting sales and profit growth across the system,” he said.

Related: Wendy’s Is Launching An AI Chatbot to Take Drive-Thru Orders

The fast-food chain plans to invest $20 million into the new technology, which will include virtual menu boards that update prices in real time. The company will begin testing in 2025.

“As we’ve previously shared, we are making a significant investment in technology to accelerate our digital business,” Wendy’s told USA TODAY in a statement. “In addition to evolving our loyalty program, one of the other benefits of these investments will be the flexibility to change the menu more easily and to offer discounts and value offers to our customers through innovations such as digital menu boards, which will roll out in some U.S. restaurants.”

Wendy’s did not immediately respond to Entrepreneur‘s request for comment.

Last May, Wendy’s announced that it was partnering with Google to create an AI-powered chatbot to help simplify the ordering process at drive-thru locations as the company continues to invest in digital technology.

Wendy’s brought in $540.7 million in revenue during Q4 2023, with total revenue for the year up $2.18 billion, just over 4% from the same time the year prior.

Related: Leveraging Artificial Intelligence In The Food Industry: How Startups Are Captivating Early Adopting F&B Operators to Tackle Theft and Waste

“Throughout my career, I have taken a customer-centric mindset coupled with strong operational execution to guide growth and deliver on strategic objectives,” Tanner said earlier this month on the company’s Q4 earnings call. “I feel strongly that my experience and leadership philosophy will support our success, and I am excited to bring this perspective to Wendy’s at such a pivotal time for the brand and industry.”

Wendy’s was down 19% year-over-year as of Tuesday afternoon.

Jonathan Maze, editor-in-chief Restaurant Business, told CNN the program could be a “turning point” in the industry.

This story originally appeared on Entrepreneur

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