After uproar, Wendy's says it won't raise burger prices at peak times


A Wendy's Co food order arranged at a restaurant in the Queens borough of New York, US. The fast-food chain has moved to clarify comments on its fourth-quarter earnings call earlier this month after coming under fire on social media following comments that some interpreted as calling for Uber-like surge pricing when demand is high. — Bloomberg

Restaurant chain Wendy's said on Feb 28 it will not raise prices for hamburgers and other items at peak times, clarifying recent comments that sparked criticism of the fast-food company.

The chain, a smaller rival to McDonald's known for similar burger-and-fries fare, said comments by its chief executive two weeks ago had been "misconstrued", leading to criticism on social media.

During an earnings conference call on Feb 15, chief executive Kirk Tanner described plans as early as 2025 to "begin testing" features such as "dynamic pricing" and other potential changes that take advantage of artificial intelligence technology.

The company's statement on Wednesday did not mention dynamic pricing, saying its plan to employ "digital menuboards" would give the company more flexibility to adjust displays.

"This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants," Wendy's said. "We have no plans to do that and would not raise prices when our customers are visiting us most."

But Wendy's, whose 7,240 restaurants are mostly in the United States, said the new technology could "allow us to change the menu offerings at different times of day and offer discounts and value offers to our customers more easily, particularly in the slower times of day".

The term "dynamic pricing" has been embraced by some tech companies such as Uber, which boosts prices at peak demand periods such as Saturday nights.

Uber has been transparent in employing the policy, describing it as a way to manage the supply of drivers during periods of peak use.

"Dynamic pricing helps us to make sure there are always enough drivers to handle all our ride requests, so you can get a ride quickly and easily – whether you and friends take the trip or sit out the surge is up to you," Uber says on its website.

But marketing professor John Zhang at the Wharton School at the University of Pennsylvania, described the proposal as a "very bad idea" for a company in Wendy's line of business.

"When people are hungry, they want to eat right now," Zhang told AFP. "If there is a price surge, they will not wait for it to go down. They will go to another restaurant."

"Customers will think it's unfair and unreasonable to pay more for the same product," he said. "They will get angry, leave and never show up again."

Neil Saunders, analyst at GlobalData, warned that while dynamic pricing is accepted in travel and hotels, it "runs the risk of causing annoyance and confusion" in fast food.

But Saunders said Wendy's may be able to "position" the change successfully.

"If Wendy's sells it as customers getting money off or a discount during quiet hours, then I think that will be accepted more than if they say they're charging a premium at busy hours," Saunders said. "The messaging is key here." – AFP

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