• by Teresa Buyikian , March 12, 2024

Who knew the price of a QSR burger would send both the media and general public into outrage overdrive, with social media feeding the frenzy? I’m pretty sure even Wendy’s didn’t know so many people cared about its Frosty pricing strategies outside the boardroom.

Of course what we’re talking about is Wendy’s CEO Kirk Tanner’s ill-fated mention on a Feb. 15 earnings call that, starting as early as next year, Wendy's would begin testing features including "dynamic pricing and daypart offerings." He also mentioned the rollout of new digital menu boards, a long-needed upgrade for the QSR.

What somehow translated to the public (thanks, New York Post) is that Wendy’s will employ SURGE pricing. As anyone who has been stuck at the airport and spent $150 to travel 10 miles with any ride-sharing service can attest, surge pricing CAN suck for the consumer. Yet besides charging the customer more during peak drive times, it is also intended to push more drivers to work, offering them higher fares.

Which is completely inapplicable to any QSR. Yet dynamic pricing is nothing new to the industry.

“Actual surge pricing doesn't make economic sense. You can't increase the price so that there's more chicken wings,” Zach Goldstein, founder and president of guest engagement tech provider Thanx, told QSR Insider. “[Most are] completely ignoring the fact that dynamic pricing, whether it's happy hours or marketing through a loyalty program to giving discounts during Wednesdays when things are slow -- all that is a type of dynamic incentive that has existed in the restaurant marketing playbook for years, and it’s not something to be scoffed at.”

Social AND mainstream media only saw the word SURGE and ran with it, with “some vowing to stack their freezer with the company's signature Frosty milkshakes to hoard for summer months,” according to Reuters. “U.S. Senator Elizabeth Warren, in a post on the social media platform X, called it 'price gouging plain and simple.'" New York Assembly member Kenny Burgos, who represents the 85th District in the Bronx, posted a message on X saying, "I will draft a bill against this dystopian s**t immediately.”

Unfortunately Wendy’s had to clarify Tanner’s statement, in a post to the chain’s blog late last month stating that the CEO's words “were misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants. We have no plans to do that and would not raise prices when our customers are visiting us most.

"Any features we may test in the future would be designed to benefit our customers … Digital menu boards 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.”

In addition to QSRs, dynamic pricing has been in play in hotels and airlines since anyone reading this has been alive, and no one is calling for a hospitality boycott or hoarding airline miles. Concerts, sporting events, parking facilities and even street meters have used dynamic pricing for decades.

What all this comes down to is communication and presentation. The brand told investors about dynamic pricing before it communicated what it actually means to consumers, and that “makes people skeptical, like [it was] a profit-driven motivation, not customer-focused,” said Goldstein. Secondly, the brand didn’t anticipate the backlash and have a response ready for nearly two weeks after the statement. “There was a potential for misinterpretation here, and they needed to be ready to quickly respond. They didn’t, and so it took on a mind of its own…. It was a communications miss, but not a strategic one. The strategy is exactly the direction the industry needs to go and it's a shame for a brand to be punished for being more data-driven and more technology-forward.”