On Wednesday, Wendy’s clarified its stance on potential menu price adjustments during peak demand periods, following CEO Kirk Tanner’s recent remarks hinting at the possibility of implementing “dynamic pricing.” Amidst social media backlash and concerns raised by investors, Wendy’s affirmed its commitment to not raising prices during peak customer visitation times.
Tanner had mentioned on an investor call earlier this month the company’s intention to explore various features, including dynamic pricing and daypart offerings, as early as 2025. Dynamic pricing, akin to surge pricing in other industries, entails adjusting prices based on demand fluctuations, especially during peak hours. However, Tanner’s comments triggered a swift and negative response online, with some consumers expressing intent to stockpile Wendy’s signature “Frosty” milkshakes to evade potential price hikes.
The backlash prompted Wendy’s to clarify its position, stating that it would not implement price increases during peak customer visitation periods. The company emphasized its plan to introduce digital menu boards in select stores, enabling easier discount offers, particularly during slower times of the day. Wendy’s asserted that the comments regarding dynamic pricing were misconstrued, refuting media reports suggesting price hikes during periods of high demand.
At a restaurant conference in Dallas, executives expressed skepticism about the viability of dynamic pricing in the restaurant industry. While successful in sectors like airlines, experts believe it may not resonate well with restaurant customers, potentially driving them to seek alternatives. U.S. Senator Elizabeth Warren also criticized Wendy’s plan, denouncing it as “price gouging plain and simple,” echoing concerns about the financial strain on American families.
Wendy’s recent sales performance has faced challenges, with visits to its outlets declining throughout the fourth quarter of 2023. Despite this, Wendy’s shares experienced a modest uptick on Wednesday following the clarification of its pricing strategy. However, the company’s profit forecast for the year remains below Wall Street estimates, influenced by factors such as rising commodity and labor costs. As Wendy’s navigates these challenges, its commitment to pricing stability during peak demand periods serves to assuage consumer concerns amidst ongoing economic uncertainties.