Americans, fed up with the price of food these days, are speaking out. In fact, the rising cost of food, and more specifically the notion of shrinkflation was immortalized in the most recent State of the Union address. President Biden’s description of how food companies are putting a smaller number of chips in packages costing the same as when they held more will be in history books for future generations to see. Another sign of consumer frustration came following the release of Wendy’s plan to implement surge pricing in its restaurants. Wendy’s strategy was met with disbelief by customers, some of whom vowed to go anywhere but Wendy’s for their fast food burger fix. So, it’s perhaps no surprise that Wendy’s quickly walked back on the idea of dynamic pricing, promising that its usual system would be left in place. While Wendy’s claims that it was the media that actually dubbed its pricing strategy ‘surge pricing’ and that it was simply planning to offer discounts at certain times of the day and charge higher prices at other times, consumers, weary of higher prices at the supermarket and in restaurants, clearly saw the scheme as another way to take more of their food dollars.
The backlash against Wendy’s reflects a feeling shared by many Americans that they are being ripped off by companies. Despite overall inflation cooling substantially since its pandemic peak, prices at the supermarket and in restaurants remain higher than they were just a few years ago. Yet, Americans, who initially accepted the price increases as part of the overall economic disruption caused by the pandemic, now expect that those prices should now be closer to their pre-pandemic point. Indeed, the disconnect between what people think an item should cost and what they’re actually being charged is contributing to a feeling that the economy isn’t actually improving, at least not for everyday purchases. Just how long it will take for reference prices, the expectation of what an item should cost, to catch up to what seems to be the new pricing reality remains to be seen. Until then, it’s likely that Americans will continue to have a beef about what they see as unnecessary high food prices.
Discussion Questions:
1. Why is surge pricing accepted in some industries like airlines and ride share, but not for fast food? Why are consumers willing to pay more for an Uber ride at certain times of the day but not fast food?
2. Discuss the disconnect between expectations of food prices and actual prices. How is it contributing to an overall frustration about the direction of the U.S. economy?
Sources| NPR: https://www.npr.org/2024/02/28/1234412431/wendys-dynamic-surge-pricing; CNN: https://www.cnn.com/2024/02/28/business/wendys-dynamic-pricing-surge-explained/index.html; WSJ: https://www.wsj.com/economy/consumers/grocery-prices-inflation-coffee-milk-903aead6; Unsplash: Photo by Dorrell Tibbs on Unsplash