Some restaurants are already using surge pricing — and reaping big profits — as Wendy’s plans fluctuating charges

Dozens of restaurants across the country have secretly begun using surge pricing, making tens of thousands of dollars in profits from the controversial practice, The Post has learned.

Barbecue chain Tony Loma’s and about 100 other small restaurants will change their menus during peak hours, similar to a rollout fast-food giant Wendy’s is planning next year, according to a company that sells software that specializes in dynamic pricing. The company is already working on changing prices.

Los Angeles-based Source Pricing, a start-up backed by founding members of Sweetgreen, Uber, Airbnb, and several private equity firms, says restaurants have “no possibility of customers paying regular prices.” “As a result, there is an opportunity to increase product prices by 10% to 20% during the lunch rush.” Add an extra $1-2 for $10 items. ” blog post on its website.

“In some cases, we have seen some restaurants grow from 10% to 20% profit margins,” the blog post says.

Source Pricing’s website says one of its customers, Las Vegas-based casual eatery Rachel’s Kitchen, earned $64,000 in “annual additional profit across three locations.”

Wendy’s CEO says the burger chain will invest in a pilot to test “dynamic pricing” next year. christopher sadowski

Rachel’s Kitchen CEO Debbie Roxazard confirmed that her company uses source pricing software.

Prices “neither rise nor fall” [by] 15% or more, that’s the limit for all menu items,” she told The Post on Tuesday.

Tony Lomas, a popular rib restaurant based in Orlando, Florida, did not respond to a request for comment.

Popular ice cream company Carvel was also listed as a Source Pricing customer on its website, but the Whale Fuzzy maker denied any relationship with the startup when contacted by the Post.

Source Pricing founder Colin Webb did not immediately respond to calls and emails seeking comment.

“Uber-style” surge pricing allows companies to raise the cost of their products if restaurants are struggling. In theory, restaurants could lower prices during off-season periods, but it’s unclear whether Wendy’s will lower prices at popular restaurants like Dave’s Singles below standard prices.

Wendy’s CEO Krick Tanner’s announcement this month that the burger chain would invest in a “dynamic pricing” pilot comes as customers fed up with ever-rising food prices and hurt by inflation caused anger and anxiety.

“Price gouging. Corporate food companies are doing it,” one angry user posted on X.

Barbecue rib chain Tony Lomas is also a Sauce Pricing customer, according to the tech company’s website. NurPhoto (from Getty Images)

But most of the price adjustments will be for online orders and are intended to help restaurants cope with higher labor and delivery fees from DoorDash, Grubhub and Uber Eats, the Source Pricing website said. is stated.

Experts told the paper that delivery has become a growing share of restaurants’ revenue and costs, especially since the pandemic.

One industry veteran noted that restaurants have long lowered or raised prices to attract customers during slow and busy seasons.

“Happy hour has dynamic pricing, as does dinner being more expensive than lunch for a burger, and offering free delivery during thunderstorms,” ​​said the founder and CEO of online food ordering company ChowNow. Chris Webb says.

“But people like authenticity, and changing prices just because demand increases is not hospitality.”

Food delivery services like Uber Eats are accelerating the trend toward higher menu prices, industry experts say. christopher sadowski

Other experts say it’s only a matter of time before the restaurant industry catches up to industries like airlines and hotels that have mastered surge pricing.

“When you check flights, prices can change dramatically within a week, but that doesn’t stop people from flying,” said restaurant analyst Mark Kalinowski.

“If more restaurant chains did the same, consumers would eventually buy into it.”



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