“The Young Turks” unleashed a sarcasm torrent about the “surge pricing”.
They mention a price for a Baconator of over $12, but they don’t say if that is for the burger alone, or a meal, with medium fries and pop. Where I live, a Baconator combo is indeed over $12, The burger itself is a few bux less. Being an old phart, the local Wendy’s franchises gives me a pop for free. I don’t need to be eating deep fried french fries, so my usual eat at Wendy’s is a salad, chicken wrap, or burger, with a free pop.
The other part of the pricing issue is Wendy’s is very stingy with coupons. I got a sheet of Wendy’s coupons last month, for the first time in probably 6 months. Arby’s and Burger King shower me with coupons every month. Just received coupons from both in the mail yesterday. With coupon, I can get two turkey gyros for $7, add 50 cents for a geezer pop, and it’s a meal. I can go to BK today and get a Whopper, large fries and large pop for $6.99. Then do the survey on the back of the BK coupon and get a free Whopper with the purchase of a small fry and small pop, a meal for less than $6.
So, by being stingy with coupons, Wendy’s is expensive anyway. Wendy’s now wants to make eating there, for the average person, even more expensive.
It is clearly NOT the same thing at all! If the airline has one seat remaining, there is ONE seat remaining and it will be sold to the highest “bidder”. The remaining 9 customers will not get a seat. When it comes to burgers, if there is a surge, all 10 customers will get their burger, it will just take a longer time to get it. The primary difference in this particular case is that in the airline case, the total supply is constrained, but in the burger case, the total supply is not constrained, but rather it is time that is constrained. I consider the two cases to be different, the first case is “scarcity pricing” and the second case is “surge pricing”.
Perhaps a good definition of “surge pricing” would include the fact that both demand and supply can be changed by the pricing changes and that it can be adjusted in near real-time.
There are proposals for banning junk fees and drip pricing. Drip pricing is mentioning a price in LARGE PRINT (the burger), but not prominently mentioning the other prices that will be added to that number to result in the total of what is typically ordered (the burger + fries + beverage).
They’re both time constrained. If someone’s bidding on the “last” airline seat, it’s not really the last airline seat that will ever be available. It’s the last seat available at that time. There’s only so many seats available to travel to a destination at a particular time of day (a given flight), but the supply of seats available generally (irrespective of time) is far larger. The other customers will get seats - they’ll just get them later.
The same is exactly true of the fast food burger lunch rush. There’s only so many people they can serve between 12:00 and 12:30 (or whenever the rush is). They only have finite physical facilities and finite staff. They are supply constrained at that time - else there wouldn’t be queuing. So they can charge more in response to the “surge.”
Uberlyft have unique business models, in that they have a vast pool of unused supply at all times that can be brought in and out of service - which they can do because they don’t bear any capital (or other) costs for that unused supply. So they can brand their “surge pricing” as a mechanism to elicit short-term increases of supply. They have an extraordinarily price elastic short term supply curve. With most companies, where it’s harder to adjust product supplied minute by minute, their short term supply curve is more inelastic. For fast food, the best they can do is manipulate their staffing and “product on hand” a bit (ie. the lunch shift will be the largest, and they might pre-make some food even if it means some might get thrown out). But it’s all the same dynamic - charge more when demand is peaking, charge less when demand is lower.
Probably not take longer, because the stores put extra staff on at lunch time. I usually mosey in the door for lunch around 2:30-3:00. For a long time, I found that the Wendy’s dining room was closed. I asked if there was any time that the dining room was open. The answer was yes, until 2:30, when the extra lunchtime staff, punched out for the day. Then the store would be down to only two or three staff, and they closed the dining room. It was the same at RS. On a Christmas Saturday, I would have five people in the store. On a July, mid week, morning, I would be alone, or have one part timer on the clock.
The menu boards list the price for the main item, and the price for the meal (including fries and drink) May not be that way everywhere, but that is the case in Michigan.
I just looked at the chart for WEN. It had been rotting off for close to a year, from $23.44 last May, to $18 and change now, but, the stock is up 1.5% today, on the word that the company will take more money from it’s customers, for nothing.
Several years ago, I said “by conventional measures, Boeing is bankrupt”, because their equity is negative, in the Billions, ie they owe more than they own. I was vigorously lectured on how wrongheaded that is. I was assured that, as long as BA didn’t really default, everything was fine.
Guess we are as obsolete as any reasonable standard of ethics and integrity.
It is sort of the same in principle, but not nearly the same in any practical sense. If you have to get from Miami to Peoria by 5PM there are only a limited number of flights available. Contrast that to all the places that will clog your arteries for cheap between 12PM-1PM.
People will grudgingly accept differential pricing if they have to, but they will tend to feel ripped off when paying the higher price. That’s not good for brand loyalty. When you only have a relatively small number of airlines to choose from, maybe these resentments don’t matter that much. But there are a lot of drive-thru fast food places…
