We’ve seen recently some huge jackpots surpassing $1 billion for Mega Millions and Powerball. But as some people know, those listed jackpots represent the annuity option. In other words, it’s the amount a winner gets paid only if they decide to receive 30 annual payments.
Meanwhile, a winner who chooses the cash/lump sum option only gets a fraction of the listed jackpot. As a result, a New York Times article calls lottery advertising “misleading,” and that’s because it is.
Poor Wendy’s. In February, the CEO announced in an earnings call that dynamic pricing would be tested. The media immediately ran wild with this nugget, comparing it to surge pricing that Uber implements during periods of high demand.
First, I want to acknowledge that I understand the economics of dynamic pricing, and many businesses do it. Look at the hospitality industry as an example. When demand for hotel rooms is higher, say, for peak travel season or a conference, room rates go up. Conversely, room rates decrease during off-peak times.
In addition, some restaurants offer early-bird or happy-hour pricing to entice customers during non-traditional eating times.
However, I wonder how much analysis Wendy’s performed on the competitive landscape. Did it think it would set the standard for the quick service industry in terms of pricing, meaning others would eventually follow suit? Did it receive intel that other restaurants were considering the idea, and Wendy’s wanted to be the first?
Also, did Wendy’s not correctly calculate the potential pitfalls of announcing dynamic pricing?
In the aftermath, Wendy’s had to issue a statement, clarifying that “We have no plans to do that (raise prices when demand is highest) and would not raise prices when our customers are visiting us most.”
Instead, Wendy’s plans to “offer discounts and value offers to our customers more easily, particularly in the slower times of day.”
That should have been the lead message. In other words, Wendy’s would have been better off saying, “One of the benefits of our new digital menu boards is that we will be able to offer discounts to our customers more easily.”
Honestly, it seems like if they had used this message, the announcement would have pretty much gone unnoticed, or at least it would have garnered far less attention. Plus, Wendy’s may have been able to sneak price increases across the board so that the discounts didn’t affect their bottom line as much.
This is another lesson in marketing in which the right way of presenting a new idea is very important to its adoption. Plus, understanding potential consequences in advance and figuring out how to avoid or minimize those consequences is crucial.
The Wisconsin Department of Transportation announced recently the recipients of its 2023 Excellence in Construction Awards, and we want to congratulate Trierweiler Construction for winning the Excellence in Concrete Paving award.
We were honored to be on a team with Trierweiler, KL Engineering and other firms on the reconstruction of Blair Street in Madison, Wis. Our role was to manage public outreach during the project, which took place in 2022 and 2023.
Of note, we are currently partnering with Kraemer North America on a project. They won the Excellence in Small Structures award for a separate project. In other words, we keep good company.