Frosty Reception

Scott Hardie | March 4, 2024
Nobody anywhere seems to like it, so maybe this is a silly question. But what do you think of the proposed surge pricing at Wendy's?

Steve West | March 4, 2024
It sounds vaguely illegal, somehow. I can't see how they think it will attract versus repel customers. Possible short-term profits will absolutely be outweighed by long-term losses. Perhaps they should surge price a burger to 1 million dollars. They'd only have to sell one.

Samir Mehta | March 4, 2024
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Scott Hardie | March 5, 2024
Interesting takes, from what sounds like opposite ends of the possible spectrum of reactions. I've seen all kinds of takes on this, some amusing.

I'm of multiple minds myself. I don't have a problem with variable pricing when it's necessary for a limited resource; I wrote favorably of Disneyland raising ticket prices as a means of crowd control. And I don't have a problem with it when it's to entice contract workers to get busy; Uber needs more drivers on the road during busy times, so they need to offer more money as an incentive sometimes. But this doesn't feel like it's truly about restaurant capacity or employee satisfaction (will staff get paid more during busy hours?); this just feels like price gouging. And the furious public response to this news, while perhaps overblown in this specific case, feels absolutely warranted in the big picture: We're all tired of being nickel-and-dimed everywhere we go by companies who have the informational capacity to do so.

I don't feel informed enough to consider myself even an "armchair" economist, so I'm probably way off base here, but I can't stop thinking about the need for two modern free-market limitations that Adam Smith couldn't have foreseen. His foundational belief, that the only useful government intervention in a free market was to prevent monopolies from abusing their position, was perfect until recently. But industrialization and growth have made it possible to exterminate the human race with climate change; the "tragedy of the commons" is no longer something that we can leave up to the free market to resolve when that's clearly not working and the stakes are this high. And the other matter is the data disparity in today's information age; essentially, companies have so much data on us that they can manipulate us and their own prices in order to gain advantages that we cannot hope to counteract merely by staying informed by a free press as Smith intended. What Wendy's proposes to do with "dynamic pricing" is a microcosm of a growing society-wide problem, that companies have vast power over us because of an information differential, and that both this power and their abuses of it remain mostly invisible to us. I don't see how we can possibly turn the tide on this without government intervention, and I wonder what Smith would make of it, and you too.

I'm not much of a fan of modern Wendy's -- I wonder if I'm the only person on Earth who still pines for the short-lived Frescata product line. So if the conspiracy theories are correct and this leaked "news" from a Wendy's shareholder call was intended to drive sales with some free publicity, I expect it to be lost on me. Has anyone else found themselves with a sudden craving this week?

Steve West | March 5, 2024
Oddly enough, Sardi's.

Samir Mehta | March 6, 2024
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Scott Hardie | March 6, 2024
Maybe. Wendy's will certainly discover in market research whether the motives that bring people to their restaurants can be affected by dynamic pricing.

Speaking as someone who eats fast food much more often than he should, speed is rarely a factor for me. Steak N' Shake is the only restaurant whose to-go service is so slow so consistently that I avoid it. And I'm lucky to be able to say that price is not a huge concern either; there are limits even for me (I gave up on the local Chipotle when our standard order of one burrito, one burrito bowl, and two sides of chips exceeded $50) but generally I tolerate the fact that everything edible has become more expensive. Instead, what matters to me is order accuracy, which could be vastly improved by this technology. I'm so very tired of getting home with my dinner and discovering items missing or made wrong; it happens way too often. Digital screens help tremendously at the order-taking stage, although they're still no help at the order-fulfillment stage.

Speaking as a former employee of four fast food restaurants: I'm skeptical that this is going to put a dent in the worker experience. We didn't (couldn't) move faster as individuals when there was a lunch or dinner rush; we just added more employees to the kitchen to get more done. So if this technology truly meant fewer customers at peak hours, it would just mean fewer workers, not less work to do for each one. And the rush didn't exactly cause stress or panic, it just meant working non-stop until there started to be gaps between incoming orders, which would free you up to do other secondary work like cleaning your station or prepping for close of business. To your question about odd rush times, Samir, my experience at Taco Bell was that there were really three rushes, with the third being a late-night rush around 9-11pm, or more like 9pm-1am on Fridays and Saturdays. That restaurant chain pursued that kind of customer and so I wasn't surprised, and I imagine that Dairy Queen gets a lot of mid-afternoon "let's go get a treat" kind of traffic and other restaurants do similarly. (Our local Dunkin restaurants are open through dinner time, but I can't imagine why; they must do 90% of each day's business before 11am.)