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this post was submitted on 28 Feb 2024
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This panic story doesn't even make sense. So as soon as it starts to get busy and they start to make good money they'll raise prices to drive people away?
What I think they meant to have rollout is to potentially raise their prices across the board and then offer discounts at off-peak times.
Functionally it's the exact same thing as what leaked but is way easier to sell as value added to potential customers.
If they make the same amount by selling less units that makes a hell of a lot more sense.
The average person probably wouldn’t notice besides “damn inflation making stuff expensive”, and they may lose a small percentage of their customers, but if the price difference makes up for it then they’re golden.
People heard “dynamic pricing” and immediately assumed “surge pricing.”
Dynamic pricing, especially in retail, is often used to milk your wallet another way - sales, promos, and bundles. You’re incentivized to buy more.
Given that the press release talked about providing value and incentives to come back, I will be money that this was an algorithmic promo engine. Wendy’s will still get more money from you, but that’s because they want to manipulate your purchasing behavior, not raise prices at noon.
Yes. Theoretically they can drive people away and make more money if the people they haven’t driven away spend more for less goods.
Let’s imagine on a normal lunch hour I sell 100 burgers at lunch for $4. If I raised my price to $4.50, I’d only sell 80 burgers. If I raised the price to $5 then I’d only sell 50 burgers If a burger costs me $3 then I normally make $1 a burger, but at the middle price I make $1.50, and $2 at the high price.
100 burger x $1 = $100 profit
80 burgers x $1.5 = $120 profit
50 burgers x $2 = $100 profit
The trick is figuring out how changing price will affect demand without pissing all your potential customers off. Restaurants already do dynamic pricing with Happy Hour and Taco Tuesdays etc. They give a “discount” to entice more people to come in when they are less busy.
Thinking about it more; I guess it all comes down to their marketing of it, as long as their "full" price is still competitive. Limited time offers are good motivators.
So, not surge pricing but slump pricing. I agree the marketing value, but I think the urge to offset the revenue reduction by raising the "standard" or non-discounted price will prove irresistible to the bean counters.