Do you know Wendy's, the well-known American fast food giant? He has just decided to take a leap into the void, perhaps forward, in the name of digital innovation. The size and purpose of the investment? They are relative: we are talking about 20 million dollars in digital menus. The direction, however, is unprecedented in the sector: the prices of its products will fluctuate in real time and based on demand, in pure "surge pricing" style.
What does it mean? I'll give you an example.
Imagine standing in line at a fast food restaurant, deciding on your order. A hamburger for 4 euros. A few minutes later the queue opens up but it's not your turn yet: and what's more, suddenly the price of your favorite hamburger rises before your eyes. €4.20. A little bad. A few more minutes, and just when it's your turn the prices change again: €4.80. What are you doing? Do you order, forget it or fall back on a second choice which in the meantime costs even less?
The introduction of Wendy's digital menus will allow the fast food chain to do just that. Adjust prices in real time based on demand. What do you think? An innovation, that of dynamic pricing, changed by services like Uber: it can now revolutionize the way we perceive fast food, but it raises questions about price dynamics and loyalty towards customers.
The psychology of dynamic prices
Dynamic pricing, as mentioned, is not an absolute novelty, but it introduces an intriguing variable into the fast food sector. The idea that the cost of a simple hamburger might increase based on current demand raises interesting psychological questions. How will customers react to seeing the price of their food change before their eyes?
This strategy could encourage a sort of "game" between supply and demand, where the customer tries to "win" by obtaining the best possible price, purchasing when the moment is right. However, there is a risk that this dynamic creates frustration and confusion, driving consumers away rather than attracting them.
A survey show that only 34% of consumers believe dynamic pricing is reasonable for customers, while 54% call it price gouging. The majority (51%) say they have stopped eating at their favorite place due to rising prices. At the end of the day, any price increase above 10% will drive away most customers or incentivize them to order during off-peak hours. After all, this could also be an objective, right? Differentiate the type of customers by "piloting" their choices with the dynamic price filter.
A bet
It remains to be seen how this strategy will influence consumer habits and whether the idea of "fluctuating" prices becomes the norm (even transforming a fast food restaurant into a somewhat classist place where you find "rich people" who buy first at any price and "smart" people who eat when can get the best price). The alternative is that it remains a joke, but I am skeptical about this scenario. Wendy's announced plans to test dynamic pricing starting in 2025, sparking customer concern about possible increases during peak hours. However, the company clarified that it will not implement "high prices", but that the digital menu technology will serve to test new pricing strategies, such as discounts during off-peak hours. The precise details of these strategies have not yet been disclosed. We'll see.
Only time will tell whether consumers will enthusiastically welcome this innovation or whether the convenience of fixed and predictable prices will prevail over yet another promise of a "revolutionary" shopping experience. And it will become particularly indigestible for those who introduced it.
