Yes, Wendy's stepped in it
A 'dynamic pricing' debacle sent the chain into crisis mode. Blame the lingo, not the media.
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.
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.
Corporate earnings don’t concern the average diner. Why should they? Execs on earnings calls speak in jargon because the calls target an audience of investors and Wall Street analysts. At the same time, these calls are 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 financial results 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. Algorithms and AI can set these ever-changing prices quickly.
Mainstream press used the term “surge pricing” to describe what Wendy’s was talking about because it’s the most recognizable example of variable consumer pricing set 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 to explain ideas and products that get lost in translation between the hospitality and technology industries. It happens all the time!
Second, to highlight the need for education here, which is something that any company dropping terms like “dynamic pricing” into a public call should understand. Instead of owning its error, Wendy’s blamed the media when it finally issued a clarifying statement. Some industry insiders pointed to an “irresponsible journalist,” others to 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.
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. 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.