By: Claire S. Campuzano
Wendy’s received a fast and frosty reaction to the reports of the franchise introducing “dynamic pricing” beginning in 2025.[1] The company’s new CEO and president explained the “digital menu board enhancements . . . will improve order accuracy [and] grow sales with upselling and merchandising.”[2] Digital menu boards, rather than traditional boards that require manual changes to prices, use dynamic pricing, which allows a company’s prices to “continuously adjust – sometimes in minutes – with response to real-time supply and demand.”[3] The fast food giant quickly addressed nationwide criticism by clarifying the pricing model would “include new menus that could offer discounts at slower times of the day [rather than] raise prices during peak demand.”[4]
Dynamic pricing, or “surge pricing,” as many consumers call it, is not a new phenomenon: rideshare and delivery companies like Lyft, Uber, and DoorDash have implemented the practice for years.[5] However, for these companies’ mobile app-based workers, high demand hours and areas have often come with financial bonuses for the drivers.[6] Lyft’s info page for its drivers explains that the driver’s fare is both “based on characteristics of the ride” and “what’s going on in [the driver’s] area.”[7] “Characteristics” include the estimated time of the ride as well as distance to pick up the driver and to complete the ride.”[8] Other factors affecting fare payments include the number of drivers nearby, the number of ride requests, and how busy the destination location is at the time of the rideshare order.[9] Similarly, Uber’s website for drivers explains the company’s use of surge pricing: as demand for rides increases, earnings for rides – and deliveries, for UberEats workers – go up.[10] At DoorDash, the delivery company offers “Peak Pay,” which is truthfully just surge pricing by a different name.[11] Where available, the workers – called “Dashers” – have “the ability to earn more while on a dash for completing deliveries that a Dasher accepts during the dates, times, and in areas Peak Pay is in effect.”[12] Peak Pay charges consumers higher payment fees, which in return provide its Dashers with bonus money on top of base pay and customer tip.[13]
Given that Wendy’s employees aren’t paid through an app like workers of the aforementioned companies, the question of how employee wages may be affected with surge pricing remains. Prior to the fast food giant’s PR walk-back, the brick-and-mortar anomaly had consumers asking whether Wendy’s would “increase the pay of the employees who work during the surge periods proportionally to the size of the price increase.”[14] For better or worse, hardly any major or minor news outlets have considered this employee-centric aspect of surge pricing. Then again, this consideration could have large-scale ramifications on wage practices. Much of the existing media coverage and public speculation has discussed how increased prices for customers can provide additional bonuses for workers.[15] If the plan is, as Wendy’s public relations team now reports, to offer discounts for customers during slower periods, the reverse consideration for wages necessarily follows.[16] As the current state of dynamic pay increases for workers with the increase of demand, will the future of dynamic wages include reduced pay for reduced demand?
[1] See Ron Ruggless, Wendy’s Expects to Test Dynamic Pricing and Daypart Offers in 2025, Nation’s Restaurant News (Feb. 15, 2024), https://www.nrn.com/quick-service/wendy-s-expects-test-dynamic-pricing-and-daypart-offers-2025.
[2] Id.
[3] Jennifer Dublino, What Is Dynamic Pricing, and How Does It Affect E-Commerce?, business.com, https://www.business.com/articles/what-is-dynamic-pricing-and-how-does-it-affect-ecommerce/ (Nov. 6, 2023).
[4] Jordan Valinsky, Wendy’s Will Test New Menus That Change Prices Throughout the Day, CNN, https://www.cnn.com/2024/02/27/food/wendys-test-surge-pricing/index.html (Feb. 28, 2024, 7:11 AM).
[5] See Alison Griswold, The Devilish Change Uber and Lyft Made to Surge Pricing, Slate (Aug. 23, 2023, 2:42 PM), https://slate.com/technology/2023/08/lyft-uber-surge-prime-time-upfront-pricing.html; see also Motley Fool, Uber Eats vs. DoorDash: Who Pays More?, The Globe and Mail (Aug. 14, 2023), https://www.theglobeandmail.com/investing/markets/stocks/UBER-N/pressreleases/19345725/uber-eats-vs-doordash-who-pays-more/.
[6] See, e.g., Lyft, The Driver’s Guide to Pay, https://www.lyft.com/driver/earnings (last visited Mar. 10, 2024) (“The [driver] fare also depends on what’s going on in your area, such as . . . [t]he number of ride requests in the area [and] [h]ow busy it is at the destination.”); see also id. (“Peak Pay adds an additional amount to the guaranteed active hourly rate.”).
[7] Id.
[8] See id.
[9] See id.
[10] See Your Earnings, Explained, Uber, https://www.uber.com/us/en/drive/how-much-drivers-make/?uclick_id=602e5f2d-f14a-4a18-98ac-c03370cc14b3 (last visited Mar. 10, 2024).
[11] See DoorDash Dasher Support: Peak Pay, DoorDash, https://help.doordash.com/dashers/s/article/Peak-Pay?language=en_US (last visited Mar. 10, 2024).
[12] Id.
[13] See id.
[14] Aerotwelve, Comment to Wendy’s Will Experiment with Dynamic Surge Pricing for Food in 2025, Hacker News (Feb. 28, 2024), https://news.ycombinator.com/item?id=39538533.
[15] See Philip Huthwaite, What Is Surge Pricing – and Is it Appropriate for my Business?, BlackCurve (Aug. 18, 2023), https://blog.blackcurve.com/what-is-surge-pricing-and-is-it-appropriate-for-my-business.
[16] See Valinsky, supra note 4.
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