The podcast discusses the controversy around Wendy's considering dynamic pricing, consumer acceptance, and where dynamic pricing could be used next. Guest Corey Mintz offers insights on the food industry and future pricing trends.
Dynamic pricing can benefit consumers by making dining more affordable during off-peak times.
Transparency is crucial in presenting price variations to consumers for better understanding and acceptance.
Deep dives
Wendy's Contemplates Dynamic Pricing But Faces Backlash
Wendy's considered implementing dynamic pricing, leading to backlash when news surfaced from an earnings call. Dynamic pricing, adjusting prices based on demand, struck a nerve due to its association with surge pricing. Struggling with the negative response, Wendy's clarified that they did not intend to raise prices during peak demand, causing speculation about consumer acceptance and potential future applications.
Fast Food Industry Economics and Adaptability
The fast food industry, particularly quick-service restaurants (QSRs), faces different challenges and opportunities compared to full-service dining. QSRs have adapted well to pandemic restrictions and changing labor dynamics by automating operations. While profits shrink in other sectors, QSRs like Wendy's are exploring options like dynamic pricing to optimize revenue amidst cost pressures.
Potential Benefits and Challenges of Dynamic Pricing for Consumers
Dynamic pricing, while controversial, can benefit consumers by making dining more affordable during off-peak times. Transparency is crucial in presenting price variations to consumers for better understanding. However, without upfront explanations, dynamic pricing can raise consumer concerns and be perceived as sneaky, requiring clear communication to build trust and acceptance.
Last week, it came out that Wendy’s was considering using dynamic pricing, which sparked concern that would mean increased prices during peak hours. Immediately, the company was met with a deluge of criticism and they reversed their decision.
While dynamic pricing is off Wendy’s menu for now, the practice is still common in everything from ride hailing services to air fare and even concert tickets.
What does the heated backlash reveal about what customers will accept? And where could dynamic pricing sneak in next?
GUEST: Corey Mintz, freelance food reporter and author of The Next Supper: The End of Restaurants as We Knew Them, and What Comes After
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