Wendy's, "dynamic pricing" and their subsequent "clarification"

[mikeymikec]

Wendy's denies plans for surge pricing after backlash

The fast food company says it has no plans to raise prices during busy periods.

www.bbc.co.uk

I thought I'd start a thread rather than potentially de-rail the Hume thread (once it started looking like it might turn into a discussion).

I know many here would be surprised for me to have a cynical take on this story, but I am somewhat sceptical of the idea that a company would pitch such a plan to its shareholders that was for any other reason than to earn more money in terms of immediate bottom line (e.g. surge pricing).

One might argue that *only* reducing prices at non-peak times would be a financial incentive to the consumer to help relieve the load at peak times, thereby reducing peak wait times. However, to pitch that plan to shareholders sounds an awful lot like, "we're having trouble with our workflow at peak times" which would subsequently draw an obvious criticism being, "fix your workflow so it handles peak times better". But since their pitch to shareholders apparently mentioned nothing of this kind of plan, I'm inclined to call a spade a spade and conclude that "dynamic pricing" really meant "surge pricing", and now they're backpedalling, or to use the popularly politically acceptable term, "clarifying".

Furthermore, decreasing prices at non-peak times (and/or possibly increasing them at peak times) would also logically draw a question of paying workers in a similarly variable manner at such times. Cost of doing business and all that. I'm not going to put a cynical spin on that point.

 

[dank69]

Businesses have been lowering prices during off-peak hours for a long time. Think happy hour type stuff or Tuesday/Wednesday only deals. If that is what they meant then there really is no issue. if they meant surge pricing and are walking it back due to backlash then there is also no harm done. I'm willing to give them the benefit of the doubt. All that matters is what they actually do. If they were contemplating surge pricing I'd hope the board realizes that the people pushing for it should be launched into the sun.

 

[ch33zw1z]

“Surge pricing” is coming IMO, only a matter of time. And those FF chains can get fuct, I already barely bring the fam there, and I haven’t eaten any in 5+ years

 

[[DHT]Osiris]

I'm still struggling with the notion that any organization running a business who's core income is from food, is surprised that they get more traffic at specific times of the day. I further struggle with their idea that it's something to be 'fixed', through carrot/stick application of the customer's finances.

 

[mikeymikec]

I'm still struggling with the notion that any organization running a business who's core income is from food, is surprised that they get more traffic at specific times of the day. I further struggle with their idea that it's something to be 'fixed', through carrot/stick application of the customer's finances.

I can understand small businesses (like the local Italian restaurant) wanting to try and fix 'dead times' with 'happy hour' type schemes, but I think large franchise operations are always going to get surge periods (ie. workers looking for breaktime food) and while they might also experience "quiet" periods, I don't think those "quiet" periods are similar to what small local businesses see; local businesses would probably kill for franchise op "quiet periods".

 

[[DHT]Osiris]

I can understand small businesses (like the local Italian restaurant) wanting to try and fix 'dead times' with 'happy hour' type schemes, but I think large franchise operations are always going to get surge periods (ie. workers looking for breaktime food) and while they might also experience "quiet" periods, I don't think those "quiet" periods are similar to what small local businesses see; local businesses would probably kill for franchise op "quiet periods".

And like, happy hour isn't the same food at a different price, it's usually just being playful with watered down drinks and lunchables or whatever. No matter how you slice this, you're paying more for food when you actually need to eat food.

It's dumb. Really dumb.

 

[fskimospy]

“Surge pricing” is coming IMO, only a matter of time. And those FF chains can get fuct, I already barely bring the fam there, and I haven’t eaten any in 5+ years

I tend to doubt surge pricing is coming. The reason surge pricing works for things like car service is that there's a limited supply of cars offering that service at the time and demand has outstripped supply. Fast food customers are very price sensitive and there's fast food places everywhere so there's no real limited supply in most areas. If Wendy's jacks up their prices I imagine people will just go to the McDonalds next door or whatever.

The only way this would work is if all the chains did it together but that's illegal collusion. I guess if Trump got back into power they could probably get away with it but any normal president would shut that shit down.

 

[ch33zw1z]

I tend to doubt surge pricing is coming. The reason surge pricing works for things like car service is that there's a limited supply of cars offering that service at the time and demand has outstripped supply. Fast food customers are very price sensitive and there's fast food places everywhere so there's no real limited supply in most areas. If Wendy's jacks up their prices I imagine people will just go to the McDonalds next door or whatever.

The only way this would work is if all the chains did it together but that's illegal collusion. I guess if Trump got back into power they could probably get away with it but any normal president would shut that shit down.

That's nice in theory, but IMO Wendy's will roll it out to wherever they can. The northeast, for instance, as the FF market has much less competition than other areas. I don't think Wendy's or any other FF chain plans on rolling it out nationwide right off the bat, but in areas where there's a chance it will work....they'll give it a shot...and nothing says McD's doesn't follow suit. Best case scenario is people eat less FF, and if even this "scare" makes that happen it's a good thing. Anyways, gotta wait to the hot-programmable price boards are installed first.

 

[Fanatical Meat]

“Surge pricing” is coming IMO, only a matter of time. And those FF chains can get fuct, I already barely bring the fam there, and I haven’t eaten any in 5+ years

Yup and it’s entirely possible with digital signage. Real problem is going to be promotions however just move all that stuff to some app to order and the app can serve us ads in its downtime.

 

[sandorski]

Supply/Demand as an excuse to Nickel/Dime. "Maximizing Profits" gone awry.

 

[soundforbjt]

“Surge pricing” is coming IMO, only a matter of time. And those FF chains can get fuct, I already barely bring the fam there, and I haven’t eaten any in 5+ years

Been close to 8 for me.

 

[nakedfrog]

I'm still struggling with the notion that any organization running a business who's core income is from food, is surprised that they get more traffic at specific times of the day. I further struggle with their idea that it's something to be 'fixed', through carrot/stick application of the customer's finances.

The "problem" being fixed here would be "unrealized profit potential", I do find it believable that there would be a notion that the increased profit from some customers would offset the lost customers. That already appears to be the case with all the existing fast food price-jacking that's happened over the last few years, this could be the next logical step in that line of thought.

 

[fskimospy]

The "problem" being fixed here would be "unrealized profit potential", I do find it believable that there would be a notion that the increased profit from some customers would offset the lost customers. That already appears to be the case with all the existing fast food price-jacking that's happened over the last few years, this could be the next logical step in that line of thought.

This still makes little sense to me. Surge pricing works with a non-substitutable product, and unless you REALLY like Wendy’s that’s not the case. Fast food restaurants generally exist in clusters so your customers can literally go next door.

Also wages for fast food employees went way up in the last few years. Seems logical they prices would too.

 

[HomerJS]

Poorer people depend on FF to feed their families because it is cheap.

BK: Let's screw over those very people

 

[nakedfrog]

This still makes little sense to me. Surge pricing works with a non-substitutable product, and unless you REALLY like Wendy’s that’s not the case. Fast food restaurants generally exist in clusters so your customers can literally go next door.

Also wages for fast food employees went way up in the last few years. Seems logical they prices would too.

I'm not saying whether I think it makes sense, but here's a quote from the ATOT thread on the subject:
"And reality is once you're at the drive thru what are you going to do is say you want nothing and leave, after sitting there and waiting?"

 

[fskimospy]

I'm not saying whether I think it makes sense, but here's a quote from the ATOT thread on the subject:
"And reality is once you're at the drive thru what are you going to do is say you want nothing and leave, after sitting there and waiting?"

I would imagine what would happen is

1) you pull up to the drive through
2) get pissed off at them screwing you
3) buy your food anyway, netting them a small additional profit
4) not come back because now you're mad at them

Since in much of America there's probably another burger joint nearby they have no ability to lock you in - they are replaceable.

 

[MtnMan]

Imagine waiting in line, looking at the menu, and before you order watch the price go up a by a $1. Yea, that will work out well for Wendy's...

 

[HomerJS]

Methinks social media will have a field day with this.

 

[pmv]

I guess it's part of a general trend, as the technology now allows businesses of all kinds to do this. I mean, there have always been "peak fares" for public transport, for example, it's just becoming easier for other businesses to do the same. On one level it's just imrpoving efficiency for allocating resources, the sort of thing capitalism and the market is very good at (and socialism fatally bad at).

It's interesting, in that the advancement of technology seems to make possible all sorts of fine-tuning of capitalism (both dynamic-pricing and massively increased information gathering on your customers).

And that amplifies the 'efficiency' of the system but also amps up all the problems it causes.

Capitalism is just becoming more capitalist, as the technology makes it possible.

As with things like AirB&B and Uber, on the one hand it helps more efficiently allocate resources, but at the same time has all sorts of destructive effects on the wider society, because it increases the effect of the distinction between rich and poor (e.g. in the case of AirB&B-like businesses it hugely increases housing shortages when every home in an area popular with tourists becomes an AirB&B catering to affluent outsiders).

With so many of these things, by making it all more 'efficient' and optimizing things from the capitalist's point-of-view it also makes the downsides more intense.

I can't really work out if the downsides will end up outweighing the good and bring the whole thing to a crisis.

Capitalism is a tremendously efficient and economically-productive system, but it seems to have an equally strong tendency to undermine the very social conditions that make it possible (which I realise is a slightly grand conclusion to draw from a burger-joint changing its pricing structure, but this is P&N)

 

[nakedfrog]

I would imagine what would happen is

1) you pull up to the drive through
2) get pissed off at them screwing you
3) buy your food anyway, netting them a small additional profit
4) not come back because now you're mad at them

Since in much of America there's probably another burger joint nearby they have no ability to lock you in - they are replaceable.

Maybe, maybe not. One would expect they would have done some research on the viability of it before making the announcement.

 

[mikeymikec]

4) not come back because now you're mad at them

I would like to know with reasonable confidence just how much of the general populace actually commits to this though, especially for convenience purchases like say fast food.

For example, I would say my wife is principled to some extent wrt purchases (she's vegetarian out of principle, for example), but I'm pretty sure she finds it mildly irksome that I won't buy EA or Ubisoft games out of principle (she likes to watch me play some video games).

 

[ch33zw1z]

Yup and it’s entirely possible with digital signage. Real problem is going to be promotions however just move all that stuff to some app to order and the app can serve us ads in its downtime.

Maybe the new sign can play me some TikTok videos just like the new gas pumps, lel

 

[fskimospy]

I would like to know with reasonable confidence just how much of the general populace actually commits to this though, especially for convenience purchases like say fast food.

For example, I would say my wife is principled to some extent (she's vegetarian out of principle, for example), but I'm pretty sure she finds it mildly irksome that I won't buy EA or Ubisoft games out of principle (she likes to watch me play some video games).

I think pretty high confidence - like I said it's super easy to substitute with somewhere else as fast food places are usually clustered together. If you were mad at a place and you could literally go next door to a place you weren't mad at it's not a big deal. If you're a huge Wendy's fan maybe it doesn't work for you but if you're a regular person who is mostly indifferent to what fast food burger you get then why not spend the extra second and a half?

 

[fskimospy]

Maybe, maybe not. One would expect they would have done some research on the viability of it before making the announcement.

I think the reaction to their announcement indicates at best their research was... inadequate.

 

[nakedfrog]

I think the reaction to their announcement indicates at best their research was... inadequate.

I expect we'll eventually find out, it's not hard to rile people up online, and that online fervor doesn't necessarily translate to real world impact.