It’s been more than two weeks since the earnings call where Wendy’s new CEO dropped the term “dynamic pricing” into the chat. It’s been zero days since I’ve read another hot take on the entire ordeal. Here is my contribution to the #discourse.
I’ll start with a confession:
I had no idea earnings calls existed until I took a job as a business writer shortly after a media company acquired my first newsletter over seven years ago. Then, I trafficked in privately held startups, years before Uber or DoorDash or Grubhub went public. Now, I understand the value of a good call, as corporate executives freely share information about the company’s performance. I don’t think I’m an outlier.
Execs on earnings calls speak in corporate jargon because the calls target an audience of investors and Wall Street analysts. But they’re accessible to everyone — the public, the press — even those who aren’t fluent in niche corporate speak.
Such was the backdrop for Wendy’s mid-February call, where the chain reported less-than-amazing earnings from both the last quarter of 2023 and the full year’s performance. Wendy’s brand-new CEO, Kirk Tanner, unveiled a serious spending plan aimed to make business better, including a major, two-year marketing effort to boost breakfast sales.
Then, Tanner shared the really big news, ostensibly without realizing the cost: Wendy’s plans to invest tens of millions of dollars in new digital menu boards at its restaurants, the CEO said. They’re digital displays that can support initiatives including, “dynamic pricing and daypart offerings, along with AI-enabled menu changes and suggestive selling.”
That’s a lot of jargon, Kirk. But the phrase in question, “dynamic pricing,” means that prices can change depending on any number of factors — demand, the weather, time of day. Since we’re all steeped in tech, these changes come thanks to algorithms and AI and can be adjusted to work quickly.
Mainstream press used the term “surge pricing” to describe what Wendy’s was talking about. It’s perhaps the most recognizable example of variable consumer pricing as aided by technology. Uber debuted the term — but not the practice! — nearly a decade ago to describe rising rideshare prices during periods of high demand. And while experts, insiders, financiers, and most people who listen to an earnings call understand that dynamic pricing does not always equal surge pricing, the average consumer understands — largely thanks to Uber — that surge pricing is a type of dynamic pricing driven by technology.
In other words, coverage in mass outlets often lacks the nuance that industry insiders and specialists understand because the average consumer doesn't understand it either.
In this case, Wendy’s didn’t completely clarify its position when asked after the call. Instead, it waited days (and several speculative headlines later) to issue a statement saying that its version of dynamic pricing would not include hiking consumer costs during peak meal periods.
Why am I jumping down this rabbit hole of semantics?
Well, for one, this newsletter exists exactly because of moments like this; times when ideas and products get lost in translation between the hospitality and technology industries. It happens all the time!
Second, to highlight the need for education here — something that any company dropping terms like “dynamic pricing” into a public call should understand. Instead, Wendy’s blamed the media when it finally issued its clarifying statement. Other industry insiders pointed at an “irresponsible journalist,” and the “insatiable desire of journalists trying to clickbait a story.”
Ouch, but also, that’s not how this works1.
The best earnings calls blend finance-friendly insider terms with real-life practicality.
Everyone asks fewer questions when leaders put complex information into proper context. Whatever you call them, dynamic-, variable-, value-, fair-pricing strategies have their place in a host of industries, including restaurants. Hotels, airlines… even my kids’ babysitter charges more during popular times.
But restaurants are frequent targets of complaints about rising prices and consumer value. This is as true at fast food restaurants like Wendy’s, as it is at full-service, independent spots trying to make business work. Or, as Oakland, California chef Geoff Davis recently told the New York Times, “People who say food is overpriced, sometimes I want to say back, ‘You have Nikes on your feet, and they’re charging a 1,000 percent markup.’”
For better or worse, the restaurant business is different from all others. Restaurants are emotional. They are experiential. Chains like Wendy’s are a near-universal experience for Americans, and often beloved. Change is challenging, but not impossible. We just have to find the right words.
What else?
Sweetgreen’s loyalty play isn’t sticking yet. In its own call, the salad chain reported fourth quarter earnings last week, and just a few weeks after adding a discounted annual subscription plan to its offerings, CEO Jonathan Neman said the company would offer a $100 option to diners interested in paying for a full year of discounts up front. Also, we learned it costs more than $450,000 to retrofit an existing Sweetgreen with the chain’s proprietary robotic tech, dubbed Infinite Kitchen.
I appreciate the detail about the robots. Since Sweetgreen announced its acquisition of Spyce, the Boston-based salad bot that’s become the Infinite Kitchen, details have been slow, even as excitement runs high. (That was the theme of the company’s last earnings report, which I covered for Fast Company.)
Chipotle’s Cultivate Next venture fund has $50 million more to invest in the future. The fund’s manager cited Chipotle’s so-far successful investments as a factor to up the spending. Importantly, two of the fund’s investments are already performing for Chipotle; the “autocado,” a bot that helps prepare avocados, and an automated “make line” from Hyphen, which is a bowl-building robot that runs under the counter at Chipotle while a human employee assembles other orders on top. — Restaurant Dive
Far from me to defend the New York Post, which appears to be media-outlet-zero in this kerfuffle — but I will defend working journalists like me, because we get this sentiment from time to time. Here’s how it works in my profession: If we’re reporting something new, controversial, or otherwise unconfirmed about a person or company, we request comment from that person or company to balance the story. The length of time we give for a response varies, but it’s fair to expect a quick turnaround when asking a corporation’s communications team for clarification on a public statement attributed to an executive. News stories don’t have opinions, but they do have angles. The angle from which a story is reported is dependent on the outlet’s audience. An Expedite story like this one, for example, is written for a reader with an understanding and care for nuance in the restaurant business. A story I write for Eater, though, is for a person who loves — but doesn’t necessarily work inside — restaurants. All of these forces, and more, influence how a story is reported, written, and marketed. Would I have chosen those exact words to describe Wendy’s plans? No. But that doesn’t mean they’re wrong.