Opinion
Rethinking Dynamic Pricing: Wendy’s CEO Pulls Back on Controversial Strategy
A strategic retreat sheds light on the complexities of surge pricing in the fast-food industry and the importance of customer perception
By Sandeep Krishnamurthy and Christopher Tang, IEBJ Contributors
What a difference a day makes. Wendy’s CEO, Kirk Tanner, retracted his decision to introduce a dynamic pricing plan on February 28. This reversal came just a day after his statements about the 2025 launch of dynamic pricing were reported in a February earnings call.
Dynamic or surge pricing, regardless of the terminology used, is generally not favored by customers, particularly in restaurants, pubs, or supermarkets. To successfully implement dynamic pricing, companies need to understand customer psychology and must effectively explain their approach to customers.
The obstacles that Mr. Tanner is encountering are not unique, and there are valuable lessons to be gleaned from his experience.
First, low hanging fruits may not be beneficial.
As the newly appointed CEO of Wendy’s since January, Mr. Tanner faced the daunting task of devising a plan to revive the company following a 14% drop in its stock price in 2023.
One potential strategy to boost profits involves using an AI-enabled system to dynamically promote different items at varying prices, potentially encouraging customers to order and spend more. As reported in the press, Tanner had unveiled new strategies during the February earnings call to enhance Wendy’s profitability. These strategies included digital menu boards capable of real-time price updates and diverse menu offers throughout the day.
While Mr. Tanner might consider this approach a no-brainer, he should be aware of past instances where similar plans were met with resistance. Rumors circulated in 2017 that UK supermarkets like Tesco, Sainsbury’s, and Morrisons were planning to use electronic labels for dynamic price changes. However, they subsequently denied these plans following customer backlash.
The implementation of dynamic pricing in restaurants and supermarkets carries inherent risks of customer defection and loss of brand reputation. This is why so few companies dare to pick this low-hanging fruit.
Second, transparency and honesty are paramount when it comes to price increases.
Following an online uproar over its dynamic pricing plan, Wendy’s issued an online statement clarifying that it “would not raise prices when our customers are visiting us most.” While this statement may mitigate some of the backlash against surge pricing, it also implies that Wendy’s intends to increase prices for certain items, which may not be perceived as sincere by consumers.
Dynamic pricing can be counterproductive if a company is seen as greedy. Before implementing a price increase or dynamic pricing, companies must genuinely explain their reasoning, supported by facts. For instance, in the fast-food sector, like Wendy’s, it’s crucial to emphasize that material and labor costs have risen post-pandemic. A new California law effective April 1, 2024, will set the minimum wage for fast-food workers at $20 per hour, $4 higher than the state’s minimum wage for 2024. Additionally, the costs of employing servers during busy hours are even higher, setting the stage for price increases.
Given the higher labor costs during peak hours, a restaurant may choose to increase prices either all the time or only during peak hours. To maintain or improve service quality during busy periods, it is arguably fairer to charge higher prices during these times rather than spreading the increased labor costs across all customers, including those who patronize the establishment during off-peak hours. This logic was employed in the UK when about 800 pubs owned by the Stonegate Group started charging an extra 20 pence (25 cents) for a pint of draft lager during peak hours from September 2023. Despite some UK customers expressing dissatisfaction with the surge pricing at the pub, no significant boycotts against the Stonegate Group have been reported to date.
Third, presenting dynamic pricing from a different perspective can be advantageous.
Dynamic pricing, which involves varying prices based on supply and demand, can be reframed positively. For fast-food chains like Wendy’s, where peak and off-peak hours are consistent daily, lower prices could be offered during off-peak hours instead of higher prices during rush hours. This approach, often termed as ‘happy hour discounts’, is familiar to customers, even though they are aware that regular prices during peak hours are higher.
Proper framing can alter customer reactions to differential pricing. This strategy has been employed at gas stations for years, where instead of imposing credit card surcharges, they offer cash discounts. The effectiveness of this framing lies in the concept of reference pricing. By promoting ‘happy hour discounts’, customers use the higher regular price during peak hours as a reference, and are pleased to find discount opportunities during off-peak hours.
While dynamic pricing is a common practice in industries like airlines, hotels, and ride-hailing services, customers in the food and beverage sector have a stronger sense of fair pricing. The use of the term “surge pricing” in particular is seen as an inherently unfair pricing approach that only benefits the company at the cost of the customer.
Therefore, the implementation of dynamic pricing in restaurants and pubs requires careful planning. If executed correctly, customers are more likely to accept price fluctuations over time. Simultaneously, restaurants and pubs can balance demand, reduce labor costs, and provide consistent service to customers.
In essence, dynamic pricing can be a mutually beneficial solution if implemented correctly.
About the Authors
Sandeep Krishnamurthy
Singelyn Family Dean, College of Business Administration
Cal Poly Pomona
Dr. Chris Tang
Distinguished Professor, Edward W. Carter Chair in Business Administration
Anderson School of Management
UCLA
Opinion
KTGY Announces Unanimous Approval of Community-Serving Shopping Center in North Redlands, California
KTGY’s design transforms an underutilized site into a neighborhood anchor and showcases Regency Centers’ commitment to the growing residential community
KTGY, an award-winning design firm focused on architecture, interior design, branded environments and urban design, announces that The Marketplace, a Whole Foods-anchored retail development designed for Regency Centers, received unanimous approval from the Redlands City Council on Feb. 17, 2026, clearing the way for the development to move forward to building permits and construction. Planned on an 8.18-acre vacant site at the northeast corner of Lugonia Avenue and Tennessee Street, the center sits in the heart of one of North Redlands’ fastest-growing residential areas.
The Marketplace is planned as a 71,400-square-foot neighborhood retail center anchored by Whole Foods and supported by four shop buildings and a dedicated drive-through pad. Designed to LEED Silver standards, the development reflects Regency Centers’ approach to placemaking, emphasizing retail environments that are authentic to their neighborhoods and foster long-term community connection. KTGY’s design reinforces and complements this vision through context-responsive architecture and a site plan shaped around community needs. The development transforms a long-underutilized site into a neighborhood anchor positioned to serve existing residents and new housing planned to the north and east.
“Working with KTGY and Whole Foods Market on The Marketplace has been a genuinely rewarding process,” said Ray Kayacan, vice president of investments at Regency Centers. “Redlands is a community that’s growing fast, and we’ve been intentional about making sure this development grows with it. Getting unanimous approval from the City Council speaks to the alignment we built with the city early on, and I think it reflects how well the full team executed against a shared vision.”
KTGY’s design team approached the site with the task of balancing client goals, tenant requirements and the needs of a future community while maximizing retail density and flexibility. The site’s proximity to the 210 freeway and its high parking requirements demanded a precise and efficient layout. KTGY allocated the required parking and EV stalls, utilized compact stall allowances and directed truck circulation around the site perimeter. The result is a finely tuned example of suburban retail that serves nearby neighborhoods, attracts customers off the freeway and creates a strong leasing environment for tenants.
The Marketplace is anchored by a 36,000-square-foot Whole Foods and organized around four retail buildings that can be flexibly divided into as many as 18 storefronts. A fifth pad building is planned for a drive-through use with its own dedicated circulation. Early concepts explored a more industrial character, but to secure the grocery anchor, KTGY adapted the development’s aesthetics to align with Whole Foods’ contemporary brand requirements.
The final design features simple, contemporary building forms emphasized by brick columns and tower elements, with a connective brick treatment carried across the center. Roofline and material variations add visual interest, while industrial accents, including gooseneck lamps and standing seam metal awnings, reference the area’s historic context. The architecture incorporates cementitious siding, stone treatments at key corners and parapet-screened rooftop equipment, creating an earthy, warm palette that responds to the surrounding neighborhood.
“Redlands has a real sense of place, and that shaped how we thought about this project from the start,” said Kayacan. “With one major housing development underway and another planned nearby, this site had an obvious gap to fill. Residents are going to have a Whole Foods, flexible retail that can support a range of needs, and a place to gather.”
KTGY also shifted back-of-house functions and truck circulation away from the main parking field, raised the sidewalk and added a landscaped berm to buffer pedestrians from drive-through and freeway activity. A lighter entrance structure at the Whole Foods façade breaks up the flat roofline and creates space for outdoor seating, and the development is rounded out by landscaped buffers and a shaded corner plaza where neighbors can gather.
Buildings are arranged around the perimeter with parking in the center, creating a clear and efficient circulation pattern. The site includes five access points: two primary driveways from Lugonia Avenue and Tennessee Street, secondary entries from both streets and a connection to the Tennessee Village development to the north. The drive-through pad includes its own pocket of parking to support tenant operations.
Two major housing developments — Lugonia Village, with 541 homes, and Tennessee Village, with 460 apartments and commercial space — were approved nearby in 2024, reinforcing the need for neighborhood-serving retail in this corridor.
“Our team approached this site with a focus on maximizing retail density and creating flexible space that can support a range of tenants while meeting the needs of the city, Regency Centers and both existing and future residents,” said Brandon Wernli, associate principal at KTGY. “Balancing a tight site, high parking requirements and a late-stage design shift to meet Whole Foods’ brand standards required precision. The result is a contemporary retail environment that reflects Regency Centers’ commitment to creating neighborhood-serving places that connect with surrounding communities.”
“This development fills a meaningful gap in the built environment,” Wernli said. “With new housing planned nearby, The Marketplace will serve as a neighborhood anchor and a convenient place to shop, dine and gather. It’s a strong example of how thoughtful design can elevate everyday community experiences.”
Construction is expected to begin in late 2026, with completion anticipated in 2028.
Opinion
Ontario International Airport Welcomes Avelo Airlines with New Nonstop Service to Sonoma County
Expansion Connects Southern California Travelers to Northern California’s Premier Wine Destination
Ontario International Airport (ONT) continues its impressive growth trajectory with the recent announcement from Avelo Airlines about their exclusive nonstop service to Sonoma County and Northern California’s renowned wine country. Starting October 10, the service will operate twice weekly on Thursdays and Sundays, connecting travelers directly to the Charles M. Schulz Sonoma County Airport (STS).
Streamlined Travel Experience
Passengers choosing Ontario International Airport are set to benefit immensely, not just from the expanded destination choices but also from the significant time savings associated with flying out of ONT. Known for its convenience and efficiency, ONT offers a more relaxed and hassle-free travel experience compared to larger, more congested airports. The smaller scale and thoughtful layout of ONT allow passengers to navigate check-ins, security, and boarding processes much more quickly, reducing the stress often associated with air travel.
Local Impact and Convenience
“Atif Elkadi, Chief Executive Officer of the Ontario International Airport Authority, highlighted the benefits of the new service, stating, “We are thrilled to add Avelo Airlines to our family of air carriers as we continue to provide exciting new destinations and travel options for the millions of Southern Californians who have made ONT their airport of choice.”
ONT’s strategic location and accessibility play a crucial role in its popularity. Situated in the heart of Southern California’s Inland Empire, the airport is conveniently reachable for residents from San Bernardino to Riverside and the surrounding suburbs. The airport’s proximity to major freeways reduces travel time to the airport itself, which is a significant advantage for local residents and businesses.
Enhanced Access to Northern California
Andrew Levy, Founder and CEO of Avelo Airlines, expressed enthusiasm about the new route, saying, “We are thrilled to announce our new nonstop service from Ontario to the Bay Area/Sonoma County, offering travelers a convenient, reliable, and affordable way to one of the most beautiful and vibrant regions in Northern California.”
Jon Stout, STS Airport Manager, also noted the mutual benefits of the new connection, “It’s fantastic to see Avelo connect Sonoma County with Ontario. This new route will bring a new level of convenience for our local residents and our neighbors in the Inland Empire.”
ONT’s continued expansion and the addition of new routes like the one to Sonoma County reflect its role as a pivotal hub in the region. With the airport on track to exceed 7 million passengers this year and recent records showing more than 650,000 passengers in June alone, ONT is setting new benchmarks in serving the community.
A Gateway to Growth
With world-class facilities and a commitment to excellent customer service, Ontario International Airport is rapidly becoming the gateway of choice for travelers seeking both domestic and international connections. Elkadi proudly asserts, “With our world-class facilities, great amenities, and unparalleled customer experiences, we are proud to connect the world to one of the most dynamic population and economic centers in the country.”
As ONT continues to expand its services and streamline travel experiences, it solidifies its position not just as a transport hub but as a significant contributor to the economic vitality of the Inland Empire.
Opinion
Surge in Unemployment Among California Youth Linked to Minimum Wage Hikes
“We have to stop touting the minimum wage as a completely harmless policy, or as some kind of remedy for poverty and income inequality… it is neither.”
In the past 18 months, California’s unemployment rate has jumped to the highest in the nation and a new analysis by Beacon Economics suggests that this peculiar increase could be a direct result of the state’s recent minimum wage hikes. Most concerning, according to the report, is that the current unemployment effect is specifically harming some of California’s most vulnerable residents—the state’s youth.
The new report highlights the fact that 90% of newly unemployed Californians over the past year and a half are under the age of 35 with the hardest hit group being teenagers. “This loss of youth work opportunity carries with it real long-run harm,” said Christopher Thornberg, Founding Partner of Beacon Economics and co-author of the new analysis. “It not only denies younger workers a critical source of income it deprives them of work experience that has been empirically shown to improve their chances of long-run success.”
While the recent rise in unemployment in California has occurred in tandem with the state’s minimum wage hikes, the relationship likely extends beyond mere correlation. According to the analysis, the jump in unemployment is incongruous with other measures of the California economy, which have continued to expand at a respectable rate. In fact, both output and household income in the state are robust and growing either faster than or similar to the nation overall. Yet, the unemployment rate in the United States as a whole has barely budged in the past 24 months.
And there is yet another anomaly: throughout the recent rise in unemployment, there has been no corresponding increase in unemployment insurance claims. If laid off tech and entertainment industry workers were driving California’s higher unemployment rate, it would almost certainly be reflected, at least to some degree, in UI claims, according to the analysis.
“For far too long, researchers and advocates alike have held up the minimum wage as a harmless and effective policy remedy for poverty and income inequality, but it is neither of those things,” said Thornberg. “Evidence has shown us that minimum wages don’t do much to address the ills they are intended to correct, but carry a substantial cost, particularly for our state’s future workers.”
Although well intentioned, Thornberg, and co-author Niree Kodaverdian, argue that higher minimum wages cause prices to increase, which end up reducing real incomes for lower-skilled workers. Available data and past empirical studies show that wage floors do very little to divert income from higher income workers to lower income ones, which is how minimum wage laws are typically characterized by proponents.
The specific effect on youth is caused because as labor costs go up relative to other inputs, employers who might have used lower-skilled, entry level workers, such as teenagers, move towards hiring older, more experienced workers, according to the analysis. The idea is that if an employer is legally obligated to pay a higher wage, they will naturally hire more skilled and productive workers to offset higher labor costs. Since those under age 25 make up nearly half of minimum wage workers, this restructuring disproportionally affects the state’s youth.
The report firmly acknowledges the need for policies to help alleviate the strain on lower income households in pricey California but argues that this particular policy remedy doesn’t work as intended, and when pushed too far, can inflict real harm on some of the state’s most vulnerable residents. Better policy options, according to the authors, include the Earned Income Tax Credit, early childhood education, and increased training for lower-skilled adults.
The full analysis can be found here.
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