There are ideas that sweep through the business world that slowly work there way into every aspect of business though at first they seemed a little odd. It’s like going to the beach and coming home with sand in your shoes — it’s everywhere.
I offer two examples:
1. Creating a club around a set of benefits such as Prime membership with Amazon; and,
2. Subscription services such as was copied by Restoration Hardware.
Each of these ideas is related and each results in a true economic benefit to the customer whilst creating a solid, secondary cash flow for the sponsor.
Prime members number 230,000,000 and each will pay $179 for their next renewal. It started out at $79 nineteen years ago in 2005.
Do the math, that’s a lot of money.
OK, dear reader. Here we go.
Another such idea is surge pricing. You have undoubtedly encountered surge pricing when you dealt with Uber. If you are in Manhattan and it is raining an hour before the shows start, guess what — you are looking at surge pricing that will at least double the cost of your ride.
There are a lot of folks who think surge pricing is just price gouging.
Yes, dear reader, Wendys is experimenting with surge pricing whereby using digital pricing screens they will alter the price of their menu including the legendary and delicious Dave’s Single (named after Dave Thomas, Wendys’ founder) with the time of the day and the amount of demand.
How would you react if you were in line at the Wendys drive-in and you caught the S U R G E?
Just as you approached the order microphone, the prices surged and your Dave’s Triple went up in price along with your Frosty?
Of course, dear reader.
Fast food prices have been on a bloody tear for the last three years, really since the Pandemic. We can blame a lot of things on the Pandemic if we care to.
McDonald’s — raised prices by 10% each in the last two years and just reported disappointing Q4 results.
Chipotle — raised prices 5 times in the last two years and warns that the California minimum wage of $16/hour effective 1-1-2024 will force them to raise prices yet again
In general, fast food prices were up 8% in 2021, 7% in 2022, and 6% in 2023.
Food prices — restaurants and groceries — are up much higher than the reported rate of inflation.
OK, here it is — surge pricing or as I like to call it price gouging is coming to a fast food restaurant near you and, then, like the ubiquitous sand from the beach everywhere.
Fast food may be fast, but it is damn sure no longer cheap.
But, hey, what the Hell do I really know anyway? I’m just a Big Red Car who is going to be taking my meals at home.
