While Wendy's (WEN) is planning to begin new dynamic menu pricing in 2025, the company is pushing back against claims that the change constitutes surge pricing. In a recent earnings call, the new CEO announced plans to use AI to help with "flexibility" in its offerings, potentially lowering prices when foot traffic is slower at restaurants.
Yahoo Finance reporter Brooke DiPalma joins the Live show to break down the latest developments for Wendy's and how AI can impact the way fast-food companies offer value and set prices.
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Editor's note: This article was written by Nicholas Jacobino
Video Transcript
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AKIKO FUJITA: Wendy's is pushing back against claims it's implementing surge pricing in its menus. In a recent earnings call, new CEO Kirk Tanner announced plans to integrate AI in its menus to give the fast food chain more, in his words, flexibility in its offerings. The company now says that's not the equivalent of raising prices based on demand.
Let's bring in Brooke DiPalma who's following this story for us. And Brooke, of course, when we hear surge pricing, we think about Uber, you know when the prices go up when demand is higher. Wendy's saying that's not what we intended at all.
BROOKE DIPALMA: Yeah, Wendy's saying that exactly, Akiko. And you've probably seen the memes across the internet where people said, hey, can I pay about $2 less or rather the price of a Baconator than it was only two hours ago? Now, Wendy's saying, whoa, whoa, whoa, that is absolutely not the case here, with no plans to raise prices when customers are visiting the most, like we see with surge pricing like Uber and Lyft. Rather Wendy says it plans to use AI technology, like you said, to have the flexibility to change menu items on digital menu boards and offer value and discounts during the day.
Now, this all kicked off, as you said, when CEO Kirk Tanner, who keep in mind just was named CEO this month, said, "Beginning as early as 2025, we will begin testing more enhanced features like," keep this in mind, "dynamic pricing," they called it, "and daypart offerings, along with AI-enabled menu changes and suggestive selling." That along with plans to invest $20 million to roll out digital menu boards to all US company-owned restaurants by the end of 2025 and plans to invest nearly $10 million over the next two years to support digital menu board enhancements. That includes order accuracy and upselling opportunities, which means suggestions to customers like, hey, do you want to add a frosty, or a cold brew, or water among other menu items to your order.
They also hope that by changing up menu offerings and implementing value throughout the day, it'll lure in more customers during slower times of day like maybe breakfast and afternoon. But overall, Akiko, this has truly taken a life of its own, created so much buzz across the internet about just how AI technology can impact the way fast food companies offer value, set pricing, and ultimately engage with consumers taking a life of its own. But now Wendy's saying, hey, we're not raising prices during the busiest times of day.
AKIKO FUJITA: OK, it's going to be a lot of eyes--
BROOKE DIPALMA: Lots of eyes.
AKIKO FUJITA: --on the new menu board when it goes up. Brooke DiPalma, thanks so much.
