Wendy's, burned by CEO comment, vows no price surges for burgers

By Waylon Cunningham and Deborah Mary Sophia

DALLAS (Reuters) -Wendy's said on Wednesday it has no plans to raise menu prices at times of peak demand, after the burger chain was scorched on social media sites for comments its CEO made earlier this month suggesting the chain may start testing "dynamic pricing."

CEO Kirk Tanner told investors on a call this month that starting as early as 2025, Wendy's would begin testing features including "dynamic pricing and daypart offerings".

Dynamic pricing refers to surge pricing based on demand, especially during peak hours of the day. Many people associate it with shifting airline ticket prices or how ride-hailing service Uber adjusts fares at busy times.

Tanner's comment sparked an online backlash this week, with some vowing to stack their freezer with the company's signature "Frosty" milkshakes to hoard for summer months. U.S. Senator Elizabeth Warren, in a post on the social media platform X on Wednesday, called it "price gouging plain and simple."

Wendy's backtracked, saying in a statement to Reuters on Wednesday that it "would not raise prices when our customers are visiting us most."

Its initiative to add digital menuboards to certain stores would allow Wendy's to offer discounts to customers more easily, "particularly in the slower times of day," the company said.

Wendy's also claimed the menuboards would provide more flexibility to change the display of featured items, saying the comments were "misconstrued" in media reports to raise prices during periods of high demand. "We have no plans to do that," the company said.

Tanner's comment was a hot topic at a restaurant conference in the Dallas area on Wednesday, with several executives responding warily to the idea that customers - already skittish after recent price increases - would welcome fluctuations in prices.

"I don't see it taking off any time soon," said Victor Fernandez, a senior analyst at restaurant analytics firm Black Box Intelligence.

Michael Lukianoff, CEO of SignalFlare.ai, who has consulted with restaurants about pricing for years, said "dynamic pricing" is a great success in other industries such as airlines, but would not work in restaurants.

"Customers will shop elsewhere," he said.

Warren's post on X, previously Twitter, said Wendy's plan "means you could pay more for your lunch, even if the cost to Wendy's stays exactly the same. It's price gouging plain and simple, and American families have had enough."

Wendy's sales have slowed. Placer.ai data showed visits to Wendy's outlets declined in all three months of the fourth quarter of 2023.

Wendy's shares, which dropped about 14% in 2023, were up 2% on Wednesday. The company recently issued a profit forecast for this year below Wall Street estimates, hurt by higher commodity and labor costs.

(Reporting by Deborah Sophia in Bengaluru, Editing by Nick Zieminski and David Gregorio)