Slow day for Gamecock news, so I bring you stupid news: Wendy's to introduce surge pricing

[18IsTheMan]

Food prices would fluctuate throughout the day.

Wendy’s planning Uber-style ‘surge pricing’ where burger prices fluctuate based on demand

With the dynamic pricing model, the chain’s iconic Dave’s Single could increase by as much as $1 at lunchtime and drop down by the same amount after the lunch rush.

nypost.com

On the surface, it sounds so horribly stupid. But we live in a stupid society. Heaven help us if this were to inexplicably catch on.

Comparisons are made to the Uber model, but that's obviously based on the fact that there are limited number of cars at any given time. Times of higher demand means fewer cars to go around. That's not at all comparable to a restaurant. They have the same amount of food around, no matter how busy or slow it is. I guess maybe workers have to work a little bit harder when it's busier, but so much of this stuff automated anyway that there really is no impact there.

 

[Lurker123]

On the surface, it sounds so horribly stupid. But we live in a stupid society. Heaven help us if this were to inexplicably catch on.

This was my first thought. Can you imagine the hassle of shopping and changing schedules so you can hit certain places on off hours.

I guess they're banking on people being too lazy to back out once they are already there ordering.

 

[Uscg1984]

Cheap skates like me will simply avoid Wendy's during the lunch hours. I generally hate hitting restaurants at peak hours anyway, due to the longer lines. I certainly don't plan to pay more for that hassle.

 

[Thunderstick]

I do not eat anyplace that has a drive-thru window. Ergo, I don't care what Wendy's charges.

 

[92Pony]

This was my first thought. Can you imagine the hassle of shopping and changing schedules so you can hit certain places on off hours.

I guess they're banking on people being too lazy to back out once they are already there ordering.

I could see it going badly for Wendy's and them scrapping this idea, orrrr..................


Ever seen all of the cars lined up and pumping gas at station A, when station B - right across the street - has the same quality gas for $.25 less per gallon? We all have. People are stupid and lazy. So, I could also see something like this catching on without a hitch. Will be interesting to watch.

 

[18IsTheMan]

I do not eat anyplace that has a drive-thru window. Ergo, I don't care what Wendy's charges.

One need not eat at Wendy’s to see that this is a pretty stupid idea.

 

[Blues man]

The day any company thinks when a line for service gets a certain length they can charge me more for the honor of standing or sitting in that line... that will be the day quit doing business with them.

 

[Uscg1984]

I do not eat anyplace that has a drive-thru window. Ergo, I don't care what Wendy's charges.

A drive-thru window is a prerequisite for any restaurant that wants my business.

 

[athenscock3]

Saw a report this am on The Today Show. Wendy's ceo announced the company is spending 20m to use AI to change electronic menu board prices based on customer volume at the moment in the store. Heard someone say Amazon is already using this technology. Is that true??

 

[will110]

If the idea was to lower prices in non-peak hours to try and increase sales, then it's not a bad idea. I'd go out of my way to eat lunch early or late if it meant cheaper prices. But if the idea is to keep the same increased prices and increase them further during peak hours, it's a terrible idea. I likely won't ever go to Wendy's again.

 

[The coup nazi]

$8.19 for a Wendy's burger? Even in Times Square? If someone is willing to pay that kind of money for a frigging hamburger, they have no right to complain about its cost. I still believe the law of supply and demand works. Somehow people have forgotten about it.

 

[Harvard Gamecock]

So do other fast food chains join in ? sit on the sidelines and wait it out ? Advertise they keep the same price all day every day ? Will some customers even notice ?

 

[Gamecock Jacque]

If everyone avoids the peak hours and goes later the peak hours would just shift to later.

 

[KOTR]

If they truly are going to be utilizing AI to change prices based on customer volume, then wouldn't it be possible for one customer to pay a lower price than the one right before or after? Seems like a potential lawsuit claiming discrimination to me.

 

[LonghornsGamecocks]

The day any company thinks when a line for service gets a certain length they can charge me more for the honor of standing or sitting in that line will be the day I no longer do business with them.

It's an embodiment of supply and demand, just in a different form than the way we normally think of it. When a good or service becomes scarce due to increasing demand, the price of that good or service can rise to a market clearing, market efficient point. Remember ~15 years ago when Maker's Mark announced they were going to lower the proof to ease supply constraints? That's an effective price increase. (Side note, Maker's should have just raised the price because the customer opposition to a mashbill change forced them to revert)

This was my first thought. Can you imagine the hassle of shopping and changing schedules so you can hit certain places on off hours.

I guess they're banking on people being too lazy to back out once they are already there ordering.

Happy-hour is the same concept, just framed and applied inversely.

 

[Uscg1984]

Happy-hour is the same concept, just framed and applied inversely.

Yes, this is really just a complete messaging screwup for Wendy's. They should have announced this as a measure to lower prices during off-peak hours (even if they quietly raised prices during peak hours). Instead, they generated the narrative that they are out to squeeze more money out of their customers during peak hours. Brilliant!

 

[Lurker123]

Yes, this is really just a complete messaging screwup for Wendy's. They should have announced this as a measure to lower prices during off-peak hours (even if they quietly raised prices during peak hours). Instead, they generated the narrative that they are out to squeeze more money out of their customers during peak hours. Brilliant!

True, but there's a variability there that isn't in a happy hour.

In happy hour, you are told in advance that during certain hours, prices are discounted.

With this, you don't know when prices are higher or lower, and can't find out till you show up at the business.

A small difference, but an important one, imo.

 

[92Pony]

$8.19 for a Wendy's burger? Even in Times Square? If someone is willing to pay that kind of money for a frigging hamburger, they have no right to complain about its cost. I still believe the law of supply and demand works. Somehow people have forgotten about it.

Hot take - as someone who remembers growing up…. Not poor, but far from ‘well-off’ - Americans have too much money these days to care about supply and demand and its effects.

 

[Gamecock Jacque]

Hot take - as someone who remembers growing up…. Not poor, but far from ‘well-off’ - Americans have too much money these days to care about supply and demand and its effects.

Link?

 

[Uscg1984]

With this, you don't know when prices are higher or lower, and can't find out till you show up at the business.

A small difference, but an important one, imo.

True. And with the prices being AI-controlled, who knows what sort of data they will use to construct their pricing. A customer certainly wouldn't be doing themselves any favors by ordering from the Wendy's app, which would quickly build a unique profile for each customer and could therefore jack up the prices on all your favorite items the second you open the app.


If this works for Wendy's, imagine the uproar that would occur if Lowe's and Home Depot followed suit and used the same dynamic pricing model for their most in-demand items in a particular region. Snow blowers and shovels could double in price ahead of a big winter storm. Same for generators and chain saws ahead of a hurricane. I'm sure the usual charges of price-gouging would apply, but if dynamic pricing is your "normal" pricing structure, I wonder if that would would be a defense.

 

[golffan]

Their payroll is higher hence higher price. Food cost is now not the cost savings idea when a worker is paid $15/hr for fast food.

 

[Rock Hill Cock]

I don't know about Wendy's in other areas, but in RH everybody complains about the Wendy's and you rarely see cars at any of them. So, they're opening another one on Celanese Rd

 

[Debo77]

If everyone avoids the peak hours and goes later the peak hours would just shift to later.

This was my first thought

 

[Debo77]

Hot take - as someone who remembers growing up…. Not poor, but far from ‘well-off’ - Americans have too much money these days to care about supply and demand and its effects.

I dont agree with this at all

 

[Thunderstick]

A drive-thru window is a prerequisite for any restaurant that wants my business.

My "thoughts and prayers" go out to you.

 

[18IsTheMan]

Wendy's is alright as far as fast food goes. Nobody expects high quality food at any of those places It's hard for me to imagine anyone wanting Wendy's so badly that they'd be willing to pay a premium for it.

 

[Harvard Gamecock]

If they truly are going to be utilizing AI to change prices based on customer volume, then wouldn't it be possible for one customer to pay a lower price than the one right before or after? Seems like a potential lawsuit claiming discrimination to me.

It would be just like plane tickets or hotels. One would have to prove intentional discrimination. Good luck with that

 

[Harvard Gamecock]

Wendy's is alright as far as fast food goes. Nobody expects high quality food at any of those places It's hard for me to imagine anyone wanting Wendy's so badly that they'd be willing to pay a premium for it.

I agree
Personally I don't bother with fast food unless I'm on a long drive to a destination. But for some they may have limited choices, particularly during lunch hours due to location and time allowed for lunch break.

 

[Gamecock72]

Happy-hour is the same concept, just framed and applied inversely.

Exept Happy Hour is a set start and end time with a set price. This is a constantly changing on-the-fly pricing based on instant demand at that time.

 

[Yemacock]

True, but there's a variability there that isn't in a happy hour.

In happy hour, you are told in advance that during certain hours, prices are discounted.

With this, you don't know when prices are higher or lower, and can't find out till you show up at the business.

A small difference, but an important one, imo.

On the other end of the spectrum, the prices charged for alcohol, soft beverages, and food at sporting events haven't slowed people down from buying it. I usually take in bottled water. I probably will buy 1 or 2 beers at $10.50-$11.50 but that's it. I love Sam's Club and am a plus member. The closest one to me is Bluffton, it's about 35 miles but it usually takes over an hour to get there due to traffic. Many of the items that were shipped free are no longer free shipping due to increased shipping charges. I quit buying things like cases of 11.5 oz V8 Vegetable Juice, Monster energy drinks and wild bird seed from them. Amazon charges a little more but prime members get free shipping. I have told Sam's Club this.

 

[18IsTheMan]

True, but there's a variability there that isn't in a happy hour.

In happy hour, you are told in advance that during certain hours, prices are discounted.

With this, you don't know when prices are higher or lower, and can't find out till you show up at the business.

A small difference, but an important one, imo.

Right. That's a major distinction. It's one thing to offer a discounted price at certain times of day to hopefully boost sales. If you happen to stroll in during a happy hour and get a discounted price, that's apples and oranges compared to walking in and being told that prices are increased because it's busy.

 

[LonghornsGamecocks]

Exept Happy Hour is a set start and end time with a set price. This is a constantly changing on-the-fly pricing based on instant demand at that time.

True, but I think the premise is still the same - trying to match price to demand at any given point in time.

A consumer is less likely to know the specific surge pricing versus happy hour pricing because now we have the data to do this down to the second. How will that information asymmetry get resolved? I don't know

I think the practical application of this by Wendy's probably won't succeed. I think there are more customer friendly ways to optimize pricing. And because most customers are unlikely to truly understand this, that will be its undoing via distrust.

 

[Thunderstick]

...Amazon charges a little more but prime members get free shipping. I have told Sam's Club this.

Sam's Club (Walmart) is acutely aware how one of its major competitors (Amazon) is operating.

 

[18IsTheMan]

All the articles are drawing comparisons to Uber surge pricing, but that's such a flawed comparison. Uber's surge pricing is based on the fact that there are a finite number of cars available at any moment in time. It's truly supply and demand. This does not apply at all for fast food restaurants.

 

[Gamecock Jacque]

Sam's Club (Walmart) is acutely aware how one of its major competitors (Amazon) is operating.

Walmart didn't become what they are by accident. I'm old enough to remember when Walmart and Kmart were more or less on equal footing. And Sears.

 

[18IsTheMan]

Walmart didn't become what they are by accident. I'm old enough to remember when Walmart and Kmart were more or less on equal footing. And Sears.

Boy, Kmart was the thing when I was a kid. That's where you wanted to go.

 

[Gamecock Jacque]

Boy, Kmart was the thing when I was a kid. That's where you wanted to go.

For me it was Sears. They had everything.

 

[18IsTheMan]

For me it was Sears. They had everything.

Yeah, it was great. A bit out our usual price range when I was a kid though, haha. It was kind of a Christmas thing, which made it exciting. We'd typically do one trip with the mall, which meant Radio Shack, which was awesome and Sears.

 

[Gamecock Jacque]

Yeah, it was great. A bit out our usual price range when I was a kid though, haha. It was kind of a Christmas thing, which made it exciting. We'd typically do one trip with the mall, which meant Radio Shack, which was awesome and Sears.

The Sears catalog. The lingerie section was just legal porn to a young lad such as myself.

 

[paladin181]

Right. That's a major distinction. It's one thing to offer a discounted price at certain times of day to hopefully boost sales. If you happen to stroll in during a happy hour and get a discounted price, that's apples and oranges compared to walking in and being told that prices are increased because it's busy.

Bold assumption to think you'd be told.