Wendy's faces backlash after 'surge pricing' reports, denies claims

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A general view from a Wendys store. The chain is facing backlash for its dynamic pricing plans (Photo by Ken Betancur/VIEWpress)

After facing backlash, Wendy’s is pushing back against widespread reports that the fast food chain plans to add "surge pricing" to its digital menu boards starting next year.

On an earnings call earlier this month, Wendy’s CEO Kirk Tanner said the company is investing $20 million to install new digital menu boards at all Wendy’s locations in the U.S. by the end of 2025, with another $10 million over the next two years to add new digital menu boards at Wendy’s across the globe.

He said one of the features of the new digital menu boards is "dynamic pricing."

"Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling," he said on the call. "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."

Wendy's cheeseburger combo (Wendy's)

Oxford Languages defines dynamic pricing as "the practice of varying the price for a product or service to reflect changing market conditions, in particular the charging of a higher price at a time of greater demand."

Wendy’s doubled down on dynamic pricing in a statement provided to FOX TV Stations on Feb. 26:

"We will begin testing a variety of enhanced features on these digital menu boards like dynamic pricing, different offerings in certain parts of the day, AI-enabled menu changes and suggestive selling based on factors such as weather," the statement read, in part. "Dynamic pricing can allow Wendy's to be competitive and flexible with pricing, motivate customers to visit and provide them with the food they love at a great value. We will test a number of features that we think will provide an enhanced customer and crew experience."

Dynamic pricing is not surge pricing, Wendy’s claims

Several news outlets, including FOX TV Stations, referred to Wendy’s new pricing model as "surge pricing," which is defined by Cambridge Dictionary as "a way of setting the price for a product or service in which the price changes according to how much demand there is for it at a particular time."

Wendy's logo (Wendy's)

After FOX TV Stations published the report and included statements from Wendy’s, the company reached out and denied those claims. The company asked FOX TV Stations to "consider updating your story."

"To clarify, Wendy’s will not implement surge pricing, which is the practice of raising prices when demand is highest. We didn't use that phrase, nor do we plan to implement that practice," a spokesperson wrote.

"Earlier this month we issued our fourth quarter and full year 2023 earnings results and included an update on investments we are making in our digital business," the statement continued. "One initiative is digital menu boards, which are being added to U.S. company-operated restaurants. We said these menu boards would give us more flexibility to change the display of featured items. This was 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."

Wendy’s is the third largest burger chain in America behind McDonald’s and Burger King. It’s also the most expensive, according to data PriceListo provided to The New York Post.

The Wendy’s "dynamic pricing" backlash comes as its biggest competitor, McDonald’s, plans to pump the brakes on higher prices and focus more on value meals after seeing a drop-off in visits by some customers, The Associated Press reported. McDonald’s said its U.S. traffic fell slightly as it saw fewer visits from customers with annual incomes of $45,000 or less.

Ohio-based Wendy’s and its franchisees operate about 7,000 restaurants worldwide. Shares of Wendy’s fell slightly in Tuesday morning trading.

"Any features we may test in the future would be designed to benefit our customers and restaurant crew members," the latest statement from Wendy’s said. "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. Wendy’s has always been about providing high-quality food at a great value, and customers can continue to expect that from our brand."

The Associated Press contributed to this report.