Reports about fast-food chain Wendy's potentially implementing surge pricing stirred up a commotion this week after Kirk Tanner, Wendy's president and CEO, hinted at the possibility during an earnings call on February 15. Tanner mentioned that Wendy's will test dynamic pricing features starting as early as 2025, utilizing new digital menu boards as part of a $20 million investment.

Contrary to initial speculations, Wendy's Vice President Heidi Schauer clarified that the company has no intentions of implementing surge pricing, emphasizing that the term was not used nor will it be put into practice. Instead, Wendy's aims to leverage the digital menus to offer discounts to customers during slower times of the day, potentially leading to lower prices during off-peak hours.

Experts like Rob Shumsky from the Tuck School of Business at Dartmouth noted that dynamic pricing or surge pricing has been a concept used in various industries for years, with the airline industry being an early adopter in the 1980s. Although surge pricing can result in fluctuating prices based on demand, it may lead to customer confusion and impact trust in the long term.

Wendy's reassured that any implementations of dynamic pricing are at least a few years away, with the focus being on enhancing customer experience and potentially offering better prices during underutilized times. While surge pricing has become more common in different sectors, Wendy's stance on not adopting traditional surge pricing practices seeks to navigate the fine line between revenue optimization and customer satisfaction.