by Jeff Jacoby
The Boston Globe
In other words, Wendy’s says it intended to do what eating and drinking establishments have long done routinely — lower prices during slack periods in order to drum up more business. Like pubs dropping the price of drinks during “happy hour” or restaurants promoting “early bird specials” to diners who come in before the evening rush, Wendy’s wants to give customers an incentive to visit during off-peak hours. That is hardly “price gouging,” no matter what Senator Warren says.
https://jeffjacoby.com/27620/the-wendy-beef-was-a-nothingburger
I’VE NEVER had a meal at Wendy’s. But the fast-food chain boasts 12 million loyalty members and had revenue of more than $2 billion in 2023, so it clearly knows something about selling hamburgers (and chicken nuggets and fries and Frosty milkshakes). To keep growing its sales, Wendy’s, like any retail company, has to get the price right — high enough to make a profit, low enough to attract customers, deft enough to account for the competition, flexible enough to respond to shifts in demand.
No surprise, then, that Wendy’s executives put a lot of thought into pricing strategy or that the subject came up when Kirk Tanner, the company’s brand-new CEO, held his first quarterly earnings call with Wall Street analysts last month. He noted that the company was investing $20 million to equip all its US restaurants with new digital menu boards, a technology that makes it possible to adjust prices, change menu items, or edit descriptions at will.
“Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day-part offerings,” Tanner said.
His remarks raised no eyebrows at the time. But on Feb. 26 the New York Post reported that Wendy’s was preparing to roll out “an ‘Uber-style’ surge-pricing model where the cost of menu items will fluctuate throughout the day based on demand.” Decrying the company’s plans as “unappetizing,” the Post blasted Wendy’s for gearing up to “squeeze more money out of already inflation-battered Americans who may not have the option to eat their meals during ‘off-peak’ hours.” That triggered an anti-Wendy’s backlash that some demagogues rushed to exploit.
“You could pay more for your lunch, even if the cost to Wendy’s stays exactly the same,” fumed Senator Elizabeth Warren, who rarely passes up an opportunity to inveigh against a retail company. “It’s price gouging plain and simple, and American families have had enough.” The Daily Show’s Ronny Chieng had a much funnier take, envisioning himself buying 1,000 burgers when the price is low, “and then I sell them high at lunchtime. . . . I’m flipping burgers, but in a rich way!”
But Wendy’s had not used the term “surge pricing,” let alone described anything as “Uber-style.” Ride-hailing apps charge more during periods when traffic spikes and nearby drivers are in short supply — during a downpour, for example, or on New Year’s Eve. Customers sometimes grumble, but it’s basic economics: When demand rises, so do prices. That’s why airfares peak in the days leading up to Christmas and why a house on the beach is a lot more expensive to rent in July than in January.
What makes sense for vacation rentals and gig-economy drivers, however, can’t be transplanted to the fast-food industry. There was never any indication that Wendy’s was proposing to jack up the price of a Dave’s Double or a Taco Salad on days when more lunch customers than usual walked through the door. “We have no plans to do that,” the company said in a statement responding to the backlash. Instead, “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.”
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