Whether Or Not Wendys Is Really Considering Surge Pricing, The Implications Are Good For QSR-Focused Digital Signage Tech
February 28, 2024 by Dave Haynes
I was re-animating myself with coffee this morning, and watching the news, when a report came on about how Wendy’s is planning to introduce surge pricing at its restaurants next year. I thought, “That’s a business decision that depends on digital signage.”
But it turns out the term “surge pricing” never left the lips of the CEO of Wendy’s, and Kirk Tanner was talking more about stuff restaurants of all stripes have been doing for years, including fundamental things like promotional pricing and menu day-parting … like disappearing breakfast options come lunchtime.
Tanner said in a recent earnings call:
“We expect our digital menu boards will drive immediate benefits to order accuracy, improve crew experience and sales growth from upselling and consistent merchandising execution. Beginning as early as 2025, we will begin testing more enhanced features like dynamic pricing and day-part offerings along with AI-enabled menu changes and suggestive selling.”
“As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase, further supporting sales and profit growth across the system. We will continue setting the pace in generative AI and now have rolled out Wendy’s fresh AI in several restaurants where we see ongoing improvement in speed and accuracy.”
Could a burger chain boost prices during peak demand periods, like a lunchtime rush? Pretty easy if the software managing the menu displays is tied in to the point of sale system. But would they raise prices because they think they can, given the likelihood of consumer backlash? Few rideshare users are pleased to see notifications on their apps that surge pricing is in effect, and we all love it when hotels, airlines and concert ticket brokers boost prices based on peak or last-minute demand.
An operator would have to balance the net gain of increased sales against the potential alienation of consumers who welcome discounts, but not premiums on familiar pricing.
Or are dynamic menus more about boosting order sizes during slow periods, getting low inventory level items off screens and emphasizing items on digital menus that are underperforming or perishable (like baked goods)?
Whether or not Wendy’s really is thinking about bumping the price of a Baconator during lunchtime rushes is arguably more of a marketing and messaging challenge than a technical one. But what a push for dynamic pricing and day-parted menus means is another argument that digital menus at the counter and in drive-thru lanes are no longer nice to haves. They are need to haves … particularly given the emergence of AI and sophisticated analytics.
I would have thought that digital menus are already a need to have at the largest QSRs, but as Wendy’s CEO noted in his comments: “As we continue to show the benefit of this technology in our company-operated restaurants, franchisee interest in digital menu boards should increase.”
Adding digital is still, often, at the discretion and under the capital and operating budgets of QSR franchise operators … and evidently a percentage of them have yet to buy into the value proposition of switching from analog menus. Hanging some flat screens behind the order counter does not involve an overly big number, but going from posters to digital screens in drive-thru lanes does indeed involve a significant financial investment.
The other interesting thing about a trend to dynamic pricing – whatever that may entail – is that there may well be restaurant operators on digital menu platforms that are more about manually updating templates and fields than using APIs tied into restaurant business systems. The more sophisticated operators need automated platforms that can be informed, guided and triggered by algorithms, not updated – when there’s time – by assistant managers in the stores.
This QSR magazine analysis gets into Wendy’s comments and the psychology of dynamic pricing, as well as how it’s referenced and interpreted by consumers.
Hi Dave…Good for digital e-menus…hmm…ya think?