A fluctuating Frosty? Wendy's will test dynamic pricing at some U.S. locations in 2025

Craving a Frosty? Better get it on a slow day - if you're going to a Wendy's that'll be testing dynamic pricing in the U.S., that is. The company recently an‐ nounced in an earnings call that it would launch the experiment at some loca‐ tions as part of its new digi‐ tal menus to be launched next year.

The idea is that the cost of menu items, such as the fastfood giant's signature frozen dessert, will fluctuate throughout the day, and might even cost more when demand is high.

After media reports not‐ ing the change were pub‐ lished on Tuesday, Wendy's responded, saying it won't in‐ crease prices during the busiest times at its restau‐ rants - and that it isn't imple‐ menting "surge pricing," which the spokesperson said was distinct from dynamic pricing.

A summary of the earn‐ ings call posted on the Wendy's website refers to "dynamic pricing" and "upsell capabilities" in a slide touting its new digital menu boards.

The company is testing more "enhanced features" such as this one alongside its digital menus, said CEO Kirk Tanner during the earnings call.

Customers likely won't see big difference, says analyst

Most consumers will already be familiar with surge pricing, thanks to ride share services such as Uber and Lyft, eventticket companies such as Ticketmaster, and the gas station, of course.

But "the opportunity is huge in the restaurant indus‐ try," said Robert Carter, a restaurant industry analyst and managing partner at Stratton Hunter Group.

Restaurants have histori‐ cally used a fixed-pricing model, though early bird spe‐ cials and limited time offers have long been used to draw customers in during slow hours or toward specific menu items, Carter said.

A similar pricing model has been used elsewhere in the fast-food industry. The price of McDonald's menu items differs based on loca‐ tion, an investigation by CBC Radio's Cost of Living found in July 2023.

The prices are set by indi‐ vidual McDonald's fran‐ chisees who oversee each lo‐ cation, factoring in rent, sup‐ plies and labour. But when

Wendy's launches its experi‐ ment next year, customers might not notice the shift in prices - because it will likely be minimal, according to Carter.

"I think what you're going to see is a surge pricing that is in the pennies," said Carter. "I don't think this is going to be something where you see, all of a sudden, a dollar fluctuation or some‐ thing of a noticeable differ‐ ence."

Expected to drive traffic during slow hours

The company is testing the approach alongside the rollout of its new digital menu board system, which was part of a $30-million US investment that included oth‐ er features like an automated drive-thru ordering system, according to notes from the company's February earnings call.

"One of the other benefits of these investments will be the flexibility to change the menu more easily and to of‐ fer discounts and value of‐ fers to our customers through innovations such as digital menu boards," a spokesperson for Wendy's told CBC News in a state‐ ment.

The spokesperson added that the change is expected to drive traffic during slower parts of the day. When asked if the changes will take effect in Canada, the spokesperson said the experiment will be confined to some U.S. loca‐ tions for now.

It's only a matter of time, said Carter. "I think we'll see how this fares in the U.S. and then I expect it will roll out in‐ to Canada."