Mixed signals?

 

Clearly, fast-food outlets are thinking in different directions when it comes to future planning.

First, McDonald's sees a bumpy ride ahead.

In the U.S., McDonald’s same-store sales rose 4.3% in the October-December period, fueled by price increases as well as successful promotions like its Happy Meal collaboration with artist Kerwin Frost. But Kempczinski said there were fewer visits and lower spending by customers earning $45,000 per year or less.

Kempczinski said that as grocery inflation has retreated, those customers are more likely to eat at home. McDonald’s hopes to get those customers back into its stores this year with marketing that emphasizes low-cost options.

“We certainly know consumers are more wary — and weary — of pricing and we’re going to continue to be consumer-led in our pricing decisions as we look forward to 2024,” Chief Financial Officer Ian Borden said.

There's more at the link.

On the other hand, Wendy's seems to think it can squeeze the hard-pressed consumer even harder.

Wendy’s will start experimenting with surge pricing, much like Uber and Lyft, as the company rolls out digital menus to all its United States restaurants by 2025, according to the company’s February earnings call. Under the test, burgers, Frosties, and other menu items will have “dynamic prices,” costing more during times of increased demand.

. . .

A Wendy’s Baconator costs $12.24 in New York City, but under dynamic pricing, that price could fluctuate throughout the day. The burger could increase in price around lunchtime or go down during a slow afternoon. Wendy’s did not provide details as to how severely prices could fluctuate.

Tanner expects dynamic pricing will result in immediate sales growth, but it’s a risky approach. A majority of consumers (52%) say dynamic pricing is equivalent to price gouging, and 65% say it makes the decision of where to eat more difficult, according to a Capterra survey.

Again, more at the link.

I'm one of those who regards so-called "dynamic pricing" as yet another way to rip off the consumer.  I guess I won't be shopping or eating at Wendy's any more, which is a pity - but that's too bad.  I know roughly what a quick meal should cost me at any fast-food outlet.  If I can no longer be sure what it'll be at one of them, I'll go to another one on principle.  (It's the same with vehicle manufacturers who now want to charge a monthly subscription for features that used to be free along with the vehicle when you bought it.  No way!  I'll buy used cars that don't need subscriptions until that's no longer practically possible, then I'll look very seriously at re-mapping whatever vehicle I buy to eliminate the need for subscriptions.  There's already a small but thriving market in re-chipping them for higher performance, and I understand that's being expanded to switch other features off or on.  Let's hear it for free enterprise!)

Which company is making the right bet on its future?  I don't know, and I guess nobody does at this stage . . . but I'm willing to bet that consumers will vote with their wallets.  My wife and I no longer eat at fast-food restaurants unless we have to, such as on a long trip;  and even there, we'll try to find something nicer in the way of restaurants as we travel, and make time to eat there, because it no longer costs much more to do that than to eat plainer, faster food.  Furthermore, if we can plan ahead and take food with us to prepare at a rest stop, we'll do that rather than eat out at all.  Our wallets can only take so much pressure!

Peter