Way back in the pre-Cambrian era, I worked at Risk Management magazine on the heels of the Enron and Worldcom scandals. We ran a story about some research that suggested commodity trading, as a profession, was especially attractive to sociopaths. We got a lot hate mail from socoiopathic commodity traders on that one.
Today’s tech bros, really aren’t much different than those Enron-era commodity traders. Their business rewards sociopathy, which is why they can see something like surge pricing for food and think it’s a good idea. What they don’t understand is that among other things, all businesses require a social license to operate. Surge pricing for food isn’t illegal, but it revokes your social license, just like suggesting people eat cereal for breakfast. We shouldn’t be surprised Wendy’s pulled this - the three guys who own the vast majority of the company are essentially bankers cosplaying as restauranteurs. I doubt they could tell you ten of their own menu items off the tops of their heads.
This is fascinating, Bill. The whole Wendy's thing did seem more like a banker move than anything else, and it did sorta remind me of Enron, rolling blackouts and all. It makes sense that some industries would attract more sociopaths than others. That's the reward system, right? But the thing I wonder about with fast food is that there's another owner in the mix: the franchisee. I know corporate sets these policies, but the franchisee strikes me as someone who typically values hard work and prides themselves on knowing their customer. If surge pricing brings in a few extra bucks and nobody minds, I'm sure the franchisees will be happy. But if it burns down the brand in an Enronian blaze of glory, I'd imagine those franchisees would revolt.
I've been surrounded by entrepreneurs most of my life and I have to say, you really can't get very far playing by the rules. Some taxes dodged here, an account in the Cayman Islands there, a few hundred underpaid workers.
Something like almost a decade ago I went to McDonalds and discovered it wasn't really that much cheaper than other food options, particularly fast casual options, not really. At that point I had already reduced eating at McDonalds to once per year, but yeah, the whole point of fast food is it's supposed to be the cheap option.
If I understand this correctly a price surge happens when too many people are buying burgers so they will increase the price for that long line? It’s a good way to shorten the line.
Meanwhile, I haven’t eaten any fast food since HS. Too many stomach aches.
And for $12 I could have made you a delish, healthy, satisfying lunch. 🥗
Yes, it's typically tied in with supply and demand dynamics (but not exclusively)
If a consumer is willing to pay more to obtain the product, then they're going to capitalize on that and inflate the price.
Having said that, when economists based supply and demand at the core of capitalism, they didn't take into account manipulation, certainly not at the scale we have it today. It implies that you "demand" this product because it's very good, not because you've been retargeted with an ad for the past week all over the internet.
Linkedin is the wildest (mainstream) social media site. The hustle culture grifters and tech bro chuds make facebooks boomers gone wild posters look sane.
1: Wendy's should have known. Maybe some intern tried to warn them but got shouted down by the marketing geniuses that think they know better.
2: Wendy's spicy chicken sandwich was the best. Although the last few times I have had Wendy's, which isn't very often, sometimes you get an actual chicken breast and other times you get what was probably pink slime chicken molded into a patty.
2a: Wendy's probably had the best fast food spicy chicken sandwich until Popeyes came along. Of course the problem with Popeyes is every time I've been, I swear it's like the employees are actively trying to cause the place to go out of business.
Also, you can't escape selfies anymore. I follow you for your insights on cyber security not to catch a reflection of your toilet in your mirror selfie.
You're right about LinkedIn. It's so weird. Sadly, I can't afford to ignore it because, well, I need work for a living. But yeah, the vibes are way off. As for Popeyes, have you ever been to Checkers? Their employees make the Popeyes staff look like amateurs when it comes to undermining the business.
Wendy’s was too honest and open with what their intentions are.
Other fast food apps send me promotions at normally non-meal times of the day. Like who’s going to BOGO a quarter pounder which cheese at 2:41pm on a Wednesday?
You make a very good point! The comment that set this in motion was the CEO on an earnings call. He was trying to tell Wall Street, "trust us, we've got some amazing plans to make more money!"
Nice work today, Michael. I have three specific observations/comments for you:
1. I can foresee a future where there are calls and puts sold on the Wendy's combo price options. I'm afraid the CFTC will necessary have to get involved, especially if futures are also on the table.
2. I wonder how much more business Wendy's is doing because of this. I think it's like a "New Coke" thing, where Coke actually ended up making more money from the "failed" stunt.
I wondered if there was a spike in Wendy's visits too. I can't be the only who thought, "I could go for some Wendy's." And you're right, we're going to see the financialization of fast food very soon. Personally, I'm bullish on novelty burgers.
I love that the Wendy’s flack pointed out that they didn’t use the term “surge pricing.” “Yeah, I killed this guy, but I take issue with you suggesting that I murdered him.”
I’m WAY behind on all of this as I’ve given up the TODAY show and didn’t see it in the local newspaper. Thank you…THANK YOU for this morning for such a great laugh this rainy morning. Not a Wendy’s in my orbit, THANK goodness!
I spend most of my available neurons thinking about ways AI can be used to manipulate us (for science, of course) Fast Food surge pricing has now made it to that list.
This reminds me of a Seinfeld episode where they're waiting at a Chinese restaurant to be seated, and Elaine, who is starving, says that they shouldn't seat people on a first come first served basis, but based on a "whoever is hungrier" scale.
I can very easily envision Uber food adding a "how hungry are you" scale. Anything to make an extra buck.
I love that episode! I don't know if it's the first one I saw, but it's the one that made me fall in love with Seinfeld. Not much of a story (in fact, the network hated it), but man oh man does that one speak to our every day life experiences. As for your point about Uber, I think they already have something like that, but it's just a "rush delivery" for an extra buck or two. Pretty sure that extra money doesn't go to the driver, though. As for your research, someone in the comments pointed out that fast food apps already pitch all kinds of deals, so I'm sure there's a plan to optimize that stuff with AI. But in the case of Wendy's I sorta think the CEO was just trying to assure Wall Street that they had an AI plan (whatever that is) and then the press and the internet took that ball and ran with it.
4. Michael, other franchises sell baked potatoes, but it’s all in the presentation and preparation. They are marketed as finely chopped “fries.” The one from In N Out really could use a load of sour cream and chives.
OMG! Genius! Absolute genius! You've solved In N Out's french fry problem. Well done, Betsy! My advice: write this up as a memo, send it to In N Out with a bill for a couple million dollars.
haha Yes, all that... It was almost 40 years ago, but I do remember they came up and dumped the fries out on the counter, and they weren't just individually frozen, but a big king rat clump of frozen fries that went skittering across and fell on the floor behind the counter while we all watched, and then everyone turned to look at the fry guy (me) and I didn't exactly get fired, but I was pretty much cut from the schedule... 👍😎🤪
Way back in the pre-Cambrian era, I worked at Risk Management magazine on the heels of the Enron and Worldcom scandals. We ran a story about some research that suggested commodity trading, as a profession, was especially attractive to sociopaths. We got a lot hate mail from socoiopathic commodity traders on that one.
Today’s tech bros, really aren’t much different than those Enron-era commodity traders. Their business rewards sociopathy, which is why they can see something like surge pricing for food and think it’s a good idea. What they don’t understand is that among other things, all businesses require a social license to operate. Surge pricing for food isn’t illegal, but it revokes your social license, just like suggesting people eat cereal for breakfast. We shouldn’t be surprised Wendy’s pulled this - the three guys who own the vast majority of the company are essentially bankers cosplaying as restauranteurs. I doubt they could tell you ten of their own menu items off the tops of their heads.
This is fascinating, Bill. The whole Wendy's thing did seem more like a banker move than anything else, and it did sorta remind me of Enron, rolling blackouts and all. It makes sense that some industries would attract more sociopaths than others. That's the reward system, right? But the thing I wonder about with fast food is that there's another owner in the mix: the franchisee. I know corporate sets these policies, but the franchisee strikes me as someone who typically values hard work and prides themselves on knowing their customer. If surge pricing brings in a few extra bucks and nobody minds, I'm sure the franchisees will be happy. But if it burns down the brand in an Enronian blaze of glory, I'd imagine those franchisees would revolt.
Ah, very interesting.
I've been surrounded by entrepreneurs most of my life and I have to say, you really can't get very far playing by the rules. Some taxes dodged here, an account in the Cayman Islands there, a few hundred underpaid workers.
This is the reward incentive.
And it's rewarding all the bad things.
$12+ for a chicken sandwich, drink and fries? I know I haven’t eaten fast food (except Chipotle) in years but that is insane!
Something like almost a decade ago I went to McDonalds and discovered it wasn't really that much cheaper than other food options, particularly fast casual options, not really. At that point I had already reduced eating at McDonalds to once per year, but yeah, the whole point of fast food is it's supposed to be the cheap option.
Yeah…I dropped fast food for real food.
I should point out that this is Los Angeles and fast food prices do vary by region. You could find a cheaper lunch option, but not that much cheaper.
Oh I get that. I’ve been to LA for work. Still…if you work remotely, wtf?
I saw an interesting decal on a car window recently. Would love to purchase one:
FTGDMFSCOTUS
Get it?
If I understand this correctly a price surge happens when too many people are buying burgers so they will increase the price for that long line? It’s a good way to shorten the line.
Meanwhile, I haven’t eaten any fast food since HS. Too many stomach aches.
And for $12 I could have made you a delish, healthy, satisfying lunch. 🥗
Yes, it's typically tied in with supply and demand dynamics (but not exclusively)
If a consumer is willing to pay more to obtain the product, then they're going to capitalize on that and inflate the price.
Having said that, when economists based supply and demand at the core of capitalism, they didn't take into account manipulation, certainly not at the scale we have it today. It implies that you "demand" this product because it's very good, not because you've been retargeted with an ad for the past week all over the internet.
Linkedin is the wildest (mainstream) social media site. The hustle culture grifters and tech bro chuds make facebooks boomers gone wild posters look sane.
1: Wendy's should have known. Maybe some intern tried to warn them but got shouted down by the marketing geniuses that think they know better.
2: Wendy's spicy chicken sandwich was the best. Although the last few times I have had Wendy's, which isn't very often, sometimes you get an actual chicken breast and other times you get what was probably pink slime chicken molded into a patty.
2a: Wendy's probably had the best fast food spicy chicken sandwich until Popeyes came along. Of course the problem with Popeyes is every time I've been, I swear it's like the employees are actively trying to cause the place to go out of business.
I love this analysis of LinkedIn sooooooo much.
Lol me too.
Also, you can't escape selfies anymore. I follow you for your insights on cyber security not to catch a reflection of your toilet in your mirror selfie.
YES! LinkedIn used to be boring in a good way, now it's weird in a bad way. I want to make LinkedIn boring again.
You're right about LinkedIn. It's so weird. Sadly, I can't afford to ignore it because, well, I need work for a living. But yeah, the vibes are way off. As for Popeyes, have you ever been to Checkers? Their employees make the Popeyes staff look like amateurs when it comes to undermining the business.
This brightened up my hangover. Thank you.
You're welcome! Now, drink some water, eat some carbs, and get some rest.
Wendy’s was too honest and open with what their intentions are.
Other fast food apps send me promotions at normally non-meal times of the day. Like who’s going to BOGO a quarter pounder which cheese at 2:41pm on a Wednesday?
You make a very good point! The comment that set this in motion was the CEO on an earnings call. He was trying to tell Wall Street, "trust us, we've got some amazing plans to make more money!"
Nice work today, Michael. I have three specific observations/comments for you:
1. I can foresee a future where there are calls and puts sold on the Wendy's combo price options. I'm afraid the CFTC will necessary have to get involved, especially if futures are also on the table.
2. I wonder how much more business Wendy's is doing because of this. I think it's like a "New Coke" thing, where Coke actually ended up making more money from the "failed" stunt.
3. Mortimer!
I wondered if there was a spike in Wendy's visits too. I can't be the only who thought, "I could go for some Wendy's." And you're right, we're going to see the financialization of fast food very soon. Personally, I'm bullish on novelty burgers.
I love that the Wendy’s flack pointed out that they didn’t use the term “surge pricing.” “Yeah, I killed this guy, but I take issue with you suggesting that I murdered him.”
"I said, I'm gonna kill you, not I'm gonna murder you. This whole case is built on a lie, your honor."
I’m WAY behind on all of this as I’ve given up the TODAY show and didn’t see it in the local newspaper. Thank you…THANK YOU for this morning for such a great laugh this rainy morning. Not a Wendy’s in my orbit, THANK goodness!
You're welcome! And keep on living that charmed life! I envy you!
WTF is a baconator?
Exactly! I think I need to write this piece.
A coronary on a bun
I spend most of my available neurons thinking about ways AI can be used to manipulate us (for science, of course) Fast Food surge pricing has now made it to that list.
This reminds me of a Seinfeld episode where they're waiting at a Chinese restaurant to be seated, and Elaine, who is starving, says that they shouldn't seat people on a first come first served basis, but based on a "whoever is hungrier" scale.
I can very easily envision Uber food adding a "how hungry are you" scale. Anything to make an extra buck.
I love that episode! I don't know if it's the first one I saw, but it's the one that made me fall in love with Seinfeld. Not much of a story (in fact, the network hated it), but man oh man does that one speak to our every day life experiences. As for your point about Uber, I think they already have something like that, but it's just a "rush delivery" for an extra buck or two. Pretty sure that extra money doesn't go to the driver, though. As for your research, someone in the comments pointed out that fast food apps already pitch all kinds of deals, so I'm sure there's a plan to optimize that stuff with AI. But in the case of Wendy's I sorta think the CEO was just trying to assure Wall Street that they had an AI plan (whatever that is) and then the press and the internet took that ball and ran with it.
4. Now that marijuana is so much more readily available to the average person, people are getting baked on their own. Who needs potatoes?
Haha!
I want to know what the heck they mean when they say they’re trying “suggestive selling”? Where could that get misinterpreted? 😂
All this surging and suggestiveness is conjuring a much different picture than a hamburger. 😬😳
I think "suggestive selling" is tech-speak for the old up-sell, as in "would you like fries with that?"
Somebody high up in the executive chain at Wendy's probably came up with the idea and nobody had the guts to tell him the idea was dumb.
I haven't ordered at Wendy's for years. None in my neighborhood.
If you started surge pricing for SN, you'd make even less than you do now and wouldn't even be able to buy a meal at Wendy's.
Baconator might be wroth a try. The Nacho Cheeseburger is too much of a mess.
I think you're right about the nacho cheeseburger. Nachos just don't seem like they can be made into a sandwich.
4. Michael, other franchises sell baked potatoes, but it’s all in the presentation and preparation. They are marketed as finely chopped “fries.” The one from In N Out really could use a load of sour cream and chives.
OMG! Genius! Absolute genius! You've solved In N Out's french fry problem. Well done, Betsy! My advice: write this up as a memo, send it to In N Out with a bill for a couple million dollars.
I’m only allowed pro bono practice for 2024 in exchange for keeping an active license, so it’s up to you, Michael, to pitch this idea and bill for it.
I once worked at a Wendy's, and somehow managed to serve still-frozen fries to someone... ;)
Did they complain? Ask for new fries? A refund? Don't leave us hanging!
haha Yes, all that... It was almost 40 years ago, but I do remember they came up and dumped the fries out on the counter, and they weren't just individually frozen, but a big king rat clump of frozen fries that went skittering across and fell on the floor behind the counter while we all watched, and then everyone turned to look at the fry guy (me) and I didn't exactly get fired, but I was pretty much cut from the schedule... 👍😎🤪
Yikes!