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Proposed Uber-style surge pricing at Wendy's sparks criticism from economists

Wendy's plan to test surge pricing draws criticism
Wendy's plan to test surge pricing draws criticism 02:12

PITTSBURGH (KDKA) — Wendy's says it will start to experiment with raising and lowering food prices in the middle of the day.

As KDKA-TV money editor Jon Delano reports, it's called surge pricing while others call it bait-and-switch.

Suppose you are standing in line at your favorite fast-food restaurant to buy a $5 hamburger, but when you get to the kiosk or cashier the price on the menu changes to $6.

Economists call in dynamic or surge pricing, and Wendy's CEO Kirk Tanner has just announced his fast-food chain wants to adjust food prices throughout the day.

"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," said Tanner.

Wendy's says high technology with digital menu boards will improve the experience, but local economists think it's all about the cash.

"It's an opportunity to make more money as you have an audience that's used to eating between, say, the hours of 11 and 1," says Prof. Brian O'Roark at Robert Morris University.

While Uber and Lyft often raise prices during rush hours and airlines often charge more on weekends and holidays, fluctuating prices at fast food restaurants may be too much for many consumers.

"I suspect that would be the last time that you were ever in that line," says Prof. Elaine Luther at Point Park University. "But also it's just the idea of being tricked. That's what the bait and switch is."

"Waiting to pay for their food and then the board switches, there's just a sense of something tawdry going on there," says O'Roark.

Delano: "Representative, do you think this is a form of bait and switch?"

State Rep. Rob Matzie: "Absolutely."

Matzie chairs the state House Consumer Protection Committee.

"We need to make sure that definitions of surge pricing, if it's not currently in the bait-and-switch legislation or law, then it's something we need to look at potentially putting in, if necessary," he said. 

So far, Wendy's says it's just testing the concept

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