Wendy’s plans to introduce Uber-style pricing at its fast-food restaurants

Wendy’s customers could soon pay varying prices for their burgers, as the fast food chain plans to introduce Uber-style pricing to its menu.

“As early as 2025, we plan to test a number of features such as AI-based menu changes and suggestive selling based on factors such as weather, which we believe will provide great value and an improved experience for customers and crew,” Wendy’s said. the spokesperson told CBS News in an email.

The strategy involves so-called dynamic pricing – also known as surge pricing – in which the cost of a product or service fluctuates depending on factors such as peak times and whether it rains or not.

Wendy’s sought to reassure customers by saying the new technology would be used to offer discounts and not raise prices when demand is high.

“We said these menus would give us more flexibility to change the display of featured items. This has been misinterpreted in some media as an intention to raise prices when demand is highest in our restaurants. We have no plans to do so and will not increase prices at times when our customers visit us most,” the chain said in an email Tuesday evening.

Wendy’s CEO Kirk Tanner said during a conference call earlier this month that Wendy’s would invest $20 million to deploy digital menu boards in all company-operated restaurants in the United States. by the end of 2025.

“As early as 2025, we will begin testing more enhanced features such as dynamic pricing and time slot offers, as well as AI-based menu edits and suggestive selling,” he added. “As we continue to demonstrate the benefits of this technology in our company-operated restaurants, franchisee interest in digital menu boards is expected to increase, further supporting sales and profit growth across the board. system.”

Tanner, a longtime PepsiCo executive, took over as CEO earlier this month, succeeding Todd Penegor, who had served as Wendy’s CEO since 2016. Last year, Penegor announced a restructuring intended to accelerate decision-making and invest more in the development of new restaurants. , especially abroad.

The avant-garde of the burger sector

The restaurant chain’s experience also highlights how customer-facing companies are looking to leverage so-called generative AI to improve everything from ordering products online to providing personalized shopping experiences.

Wendy’s has rolled out its “Wendy’s Fresh AI” drive-thru in several restaurants, which uses generative AI to improve the speed and accuracy of the drive-thru, the CEO said.

A spokesperson for the Dublin, Ohio-based burger chain said Wendy’s investments in technology would give it “the flexibility to change the menu more easily,” helping drive traffic and “bringing of value during the slowest parts of the day. These features are also increasingly important as more fast food customers place their orders online or through apps.

“This already exists in a few sectors, but in the context of fast food, this is a new development that pushes the technology to new places,” said Steven Suranovic, associate professor of economics at the University George Washington, to CBS News.

Price increases are rare, but not unprecedented, in the food industry. It was adopted by Britain’s biggest pub group, Stonegate Group, which in the autumn began charging around 25p more for a pint on weekends and evenings in around 800 of the 4,000 pubs it operates. exploits, The New York Times reported in September.

“You might end up with these surge moments where prices are higher and customers want the fixed price day, and you just knew what you were going to get,” Suranovic offered. “There’s a certain irritation after growing up in a world where price is price, and then you throw yourself into that environment.”

Airlines are a great example of dynamic pricing and the potential frustration of trying to navigate different fares from one day to the next, Suranovic added. This proved to be the case for AMC Entertainment. The world’s largest movie theater chain abandoned plans last summer to charge more for movie tickets in prime locations, after testing the practice in the face of negative reviews in three states.

To make the concept work, Wendy’s will need to emphasize its ability to lower prices outside of peak hours, according to Suranovic. “It can hurt to be the first to take the initiative,” he said. “People have a choice: they can go to McDonald’s.”

This is what Wendy is planning. A spokesperson said the technology would allow it to “change menu offerings at different times of the day and more easily provide discounts and great deals to our customers, particularly during the quieter times of the day.” .

Founded in 1969 and known for its square hamburgers and Frosty dessert, Wendy’s and its franchisees operate 6,030 restaurants in the United States and 1,210 restaurants in 32 foreign countries.

—The Associated Press contributed to this report.