Wendy’s to start rolling out surge pricing with ‘AI-enabled menu changes’

Click to play video: 'Surge pricing could leave bad taste'
Surge pricing could leave bad taste
WATCH: Surge pricing is a concept one of North America's largest fast-food chains is planning to implement in the U.S. next year although there are no plans for it to happen in Canada. But as Katherine Dornian reports, the move could leave a bad taste.

Wendy’s is planning to roll out dynamic pricing for its fast-food offerings starting as early as next year.

The chain will start testing the new pricing system “in some U.S. restaurants,” Wendy’s said in a statement to Global News. There are currently no plans to introduce this system in Canada — at least, not yet.

Dynamic pricing, also known as surge pricing, is the practice of setting flexible prices for products and services, meaning the price paid by customers can fluctuate based on market demands. Uber is a high-profile company that famously employs dynamic pricing. During busy times, the price of an Uber car-share ride is generally higher than during lower-traffic periods.

Click to play video: 'Dynamic ticket pricing explained'
Dynamic ticket pricing explained

“We are making a significant investment in technology to accelerate our digital business,” Wendy’s said of the change. “In addition to evolving our loyalty program, one of the other benefits of these investments will be the flexibility to change the menu more easily and to offer discounts and value offers to our customers through innovations such as digital menuboards.”

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The company says this new policy is aimed at driving sales “during slower parts of the day” and “based on factors such as weather.”

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“As early as 2025, we plan to test a number of features such as AI-enabled menu changes and suggestive selling based on factors such as weather that we think will provide great value and an improved customer and crew experience,” Wendy’s states.

Wendy’s CEO Kirk Tanner discussed the policy during a conference call earlier this month.

“As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase, further supporting sales and profit growth across the system,” he said.

According to the company’s fourth-quarter earnings, Wendy’s plans to spend approximately US$30 million to “support a rollout of digital menu boards to all U.S. Company-operated restaurants by the end of 2025 and digital menu board enhancements for the global system over the next two years.”

Tanner, a longtime PepsiCo executive, became Wendy’s CEO earlier this month. He succeeded Todd Penegor, who had served as Wendy’s president and CEO since 2016.

Last year, Penegor announced a restructuring intended to speed decision-making and invest more in new restaurant development, particularly overseas. The chain and its franchisees operate about 7,000 restaurants worldwide.

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Shares of Wendy’s fell slightly in Tuesday morning trading.

— With files from The Associated Press

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