Surge pricing to level demand is a potentially valid strategy when you’re trying to even optimize your off-peak manpower or have limited production capacity. Surge pricing to increase profits is going to be detrimental to their business.
People have options, and it’s very easy to go somewhere else. If the food isn’t better the price and demand are going to be perfectly related. Every price hike matched by a corresponding drop in sales. Zero sum game.
As if they’d write something like that? I think it’s more likely they’ll just show a higher price as if it’s the normal base price and hope people don’t notice or care.
If they were smart, they’d raise the prices to whatever their maximum surge pricing is and then show discounts on slower times. Then when they roll back the policy, they get a sneaky price increase because the higher prices were the “non-discoumted” prices
In an ideal world, it would only be a way to reduce demand so it meets a limited supply… but yeah, when supply can be increased, it’s kind of fleecing, since profit margins increase.
The flip side is that, in the low hours, the same fixed costs would need to be spread over a lower demand, increasing prices… but that would reduce demand even more, which would increase prices even more. So a “seasonal” (or “hourly”) business, needs to sell at a lower profit or even at a loss during low demand in order to stay open, then recoup that during high demand. If they don’t, then we get a “farmers vs Europe” situation.
The Subway near me is often very quiet, but at particular times, predictably every week, they’re absolutely slammed. If they jacked all their prices by $1, then offered “off-hours discounts” of even $2, they’d probably see the same average price per sandwich, but shift customer demand to keep the restaurant more steady. They might even attract new customers who don’t come during rush times because they’re time sensitive, not price sensitive.
In other words, this could be a win-win-win for everybody:
Subway sees higher total revenue
Price-sensitive customers can shift their orders to lull hours and save a bit of money
Time-sensitive customers have lower wait times during lunch/dinner rush.
Subway (and Wendy’s, for that matter) already do this a bit with their coupons; I rarely go to Subway without coupons since I’m price sensitive. Switching from coupons to scheduled price fluctuations isn’t really a big change, and keeps people paying less with coupons from gumming up the dinner rush.
You have to look at why are they busy at particular times though. Is it first thing? That’ll be breakfast on the way to work. Lunchtime? Speaks for itself. Early evening, that’ll be after work.
People can’t just randomly change their work hours to suit Subway/Wendy etc prices.
And, not everyone wants breakfast at 11 am and lunch at 3pm.
Any company upping their prices because it’s busy are just gouging customers.
How about they reduce prices when less customers are about?
on principle i will never trust any corporation to do good things unless compelled to by a higher power such as the state, and i certainly do not trust them to do good things when the corporate-speak being used to describe those things is “enhanced features like dynamic pricing and daypart offerings along with AI-enabled menu changes and suggestive selling.” reeks of grift
Sure, but nothing I wrote above depends on trust. This seems like it could be an Econ 101 example of the profit motive increasing the total utility in the system. Hence why I said this has the potential to be win-win-win.
I don’t trust companies to pursue anything other than the profit motive but sometimes that can be a good thing.
the premise of a “win-win-win” scenario is necessarily predicated on the belief that a corporation would ever let such an arrangement occur versus just shamelessly exploiting its customers and telling them to love it or leave it, which is a form of trust. in my mind that is trust that is severely unearned by literally any current corporation—and i would firmly assert that even outside of a vacuum the vast majority of corporations will gladly tell (and right now are in the process of telling) their customers the latter
actually, i guess i should say that some corporations get a carve-out here, since worker co-operatives also fall under the banner—i think you can trust most worker co-ops to serve your interests in principle when you interact with them. but i would otherwise sustain that yeah, you should just be adversarial with corporations and assume that what they’re doing is ultimately intended to fuck you, nickle-and-dime you, or just generally treat you like dirt. i’m just not sure why a corporation like Wendy’s should ever get your benefit of the doubt or presumption of acting in your interests as a customer, ultimately.
Price-sensitive customers can shift their orders to lull hours and save a bit of money
No, that’s not part of this. They never said they’re dropping prices during off hours, just increasing them during busy ones. Price conscious people will be getting the same cost they are now or a price increase, not a discount.
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