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

There was an elephant in the room during Wendy’s quarterly earnings call this week – ‘surge pricing’.

It became a huge issue for the fast food giant earlier this year after DailyMail.com reported its plans to roll out ‘digital menuboards’ with prices that would change during the day.

During the call on Thursday chief financial officer Gunther Plosch made no mention of what the company itself prefers to call ‘dynamic pricing’.

But he did say that Wendy’s is paying such close attention to its prices that it employs an ‘external pricing consultant.’

That is to ensure it is ‘making the right pricing decisions,’ he said.

‘We’re going to stay careful on pricing,’ said Plosch. ‘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 consultant to ensure it is ‘making the right pricing decisions’

He said prices were likely to rise in the low single-digits over the next year, so less than 5 percent or so. A Dave’s Single burger that costs around $5.70 excluding tax now might therefore cost around $5.90 in a year.

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

‘These two things are not connected,’ wrote a spokesperson for the company. ‘We have worked with a third-party pricing consultant for some time to support our franchisees with pricing decisions in their respective regions.’

They also said Wendy’s will still be rolling out digital menus as early as next year.

‘Digital menuboards could allow us to change the menu offerings at different times of day,’ they said.

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

But after DailyMail.com reported on its comments, Americans reacted in horror to subsequent broadcasts and reports in newspapers that they might be expected to pay higher prices at busier times of the day.

Days later, the Dublin, Ohio-based company backtracked and claimed it would only roll out features ‘designed to benefit our customers and restaurant crew members.’

While he admitted it would change prices, he said this would be to make them lower during slower times of day. It denied it would raise them when restaurants get busier.

This week, the company reported that its margins were up 0.6 percent year-on-year.

That was ‘primarily due to the benefit of a high average check driven by carryover pricing of over 3 percent, partially offset by customer count declines and an increase in labor costs,’ Plosch said.

Wendy’s experienced furious 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 around $5.99 at a Wendy’s in Newark, New Jersey. If Wendy’s did go ahead with dynamic pricing that might vary throughout the day depending on the demand

The executive said that prices increased by around 4 percent last year and were likely to increase in the ‘low single-digits’ in the coming year.

Justifying its cautious pricing strategy was that consumers are still coming under pressure, as inflation continues to harm their buying power.

Lower-income households with incomes less than $75,000 were especially impacted and made fewer visits to restaurants in the past quarter, according to Plosch.

The company did however grow sales overall – net income over the quarter was $42 million, up from about $40 million in the same period last year.