The plan to bring the excitement of day trading to the experience of buying a Baconator didn’t pan out for Wendy’s, but the concept could be coming to more restaurants soon.
Driving the news: Wendy’s backtracked on its plan to implement so-called surge pricing into its fast-food joints, but some in the restaurant industry say dynamic pricing — where prices fluctuate frequently based on demand — could soon become commonplace.
- Per the Wall Street Journal, dozens of restaurants in the U.S., like Cali BBQ and Bartaco, already use dynamic pricing to change the price of menu items on a weekly or monthly basis based on demand trends.
- Last year, the U.K.’s biggest pub operator launched dynamic pricing at 800 locations, charging more for pints during peak hours and dropping prices during less crowded times.
Why it matters: You already face dynamic pricing when you book a flight, buy a movie ticket, or pay your energy bill. While Wendy’s took a lot of flack for what seemed like a far-fetched idea, applying dynamic pricing becomes easier — and, perhaps, inevitable — as industries adopt more digital technology.
- In the past, paper menus, cash payments, and analog bookkeeping systems made it too much hassle for restaurants to constantly change menu prices.
- Now, with the wide adoption of digital payments, online menus, and app-based food ordering, implementing dynamic pricing has become much more straightforward.
Yes, but: As we saw with Wendy’s, surge pricing has the potential to upset a lot of budget-conscious customers, a fear that has led chains like Applebees to shy away from it entirely.
Bottom line: Any business trying to make it work will have to sell customers on the idea that — like a fluctuation happy hour — dynamic pricing gives them the chance to actually save money.—LA