Wendy’s executive gives update on menu prices: ‘We won’t get too greedy’

There was an elephant in the room this week during Wendy’s quarterly results: ‘surge pricing’.

It became a big deal for the fast food giant earlier this year after DailyMail.com reported its plans to roll out ‘digital menu boards’ with prices that would change throughout the day.

During the telephone conversation on Thursday, financial director Gunther Plosch made no mention of what the company prefers to call ‘dynamic pricing’.

But he did say that Wendy’s watches prices so closely that it employs an “outside pricing consultant.”

That’s to ensure it “makes the right pricing decisions,” he said.

“We remain cautious with prices,” Plosch said. “I don’t think we’re going to get too greedy.”

Wendy’s CFO Gunther Plosch (pictured) assured investors that the company employs an external pricing advisor to ensure it ‘makes the right pricing decisions’

He said prices are likely to rise by low single digits, less than 5 percent, over the next year. So a Dave’s Single burger that now costs about $5.70 before tax could cost about $5.90 a year from now.

On Friday, Wendy’s DailyMail.com would not say whether or not it had hired the consultant in question before the February backlash, but said the two events were unrelated.

“These two things are not related,” a company spokesperson wrote. “We have been working with an external pricing advisor for some time to support our franchisees with pricing decisions in their respective regions.”

They also said Wendy’s will roll out digital menus as soon as next year.

“Digital menu boards could allow us to change menu offerings at different times of the day,” they said.

Wendy’s CEO Kirk Tanner first hinted at how its dynamic pricing plans would boost earnings in February during his previous quarterly call with analysts.

But after DailyMail.com reported on his comments, Americans reacted with horror to subsequent broadcasts and newspaper reports that they could be expected to pay higher prices at busier times of the day.

Days later, the Dublin, Ohio-based company backtracked, claiming it would only roll out features “designed to benefit our customers and restaurant workers.”

While it admitted it would change prices, it said this would be to make them lower at slower times of the day. It denied it would increase these as restaurants become busier.

This week, the company reported that margins rose 0.6 percent year-over-year.

That was “primarily due to the benefit of a high average check, driven by a transfer price of over 3 percent, partially offset by a decline in customer numbers and an increase in labor costs,” Plosch said.

Wendy’s faced angry backlash in February after it was reported that it was considering changing the cost of menu items at certain times of the day

A Dave’s Single quarter pounder currently costs about $5.99 at Wendy’s in Newark, New Jersey. If Wendy’s were to continue with dynamic pricing that could vary throughout the day depending on demand

The executive said prices rose about 4 percent last year and are likely to rise by “low single digits” in the coming year.

The cautious pricing strategy was justified by the fact that consumers are still under pressure as inflation continues to damage their purchasing power.

According to Plosch, lower-income households with incomes of less than $75,000 were particularly affected and visited fewer restaurants in the past quarter.

Overall, though, the company’s revenue grew: Net income for the quarter was $42 million, compared to about $40 million in the same period last year.