Wendy’s (NASDAQ:WEN) has dropped its idea of implementing dynamic pricing. The decision came after encountering a wave of criticism on social media following its CEO’s announcement regarding the commencement of dynamic pricing testing in 2025.
Dynamic pricing means adjusting prices based on demand. Wendy’s clarified that it does not intend to raise menu prices during peak demand periods. Instead, the company plans to utilize digital menu boards in its stores to offer discounts to customers, a strategy that was wrongly interpreted as dynamic pricing implementation.
The Background
During the Q4 earnings call on February 15, Wendy’s CEO Kirk Tanner said that starting in 2025, the company plans to explore more features, such as dynamic pricing, alongside AI-driven menu changes.
Additionally, Tanner outlined plans to invest about $20 million to deploy digital menu boards across all U.S. company-operated restaurants by the end of 2025. He added that the company will spend an extra $10 million over the next two years to enhance the global network’s digital menu board system.
Is Wendy’s a Buy or Sell Stock?
Wendy’s stock has declined nearly 14% in one year, underperforming the S&P 500’s (SPX) over 28% gain. Analysts see limited upside potential over the next 12 months and remain sidelined.
Bernstein analyst Danilo Gargiulo downgraded Wendy’s stock to Hold from Buy on February 22. Further, the analyst lowered the price target to $20 from $24. Gargiulo sees a lack of growth drivers for the company and considers its projected breakfast growth outlook overly optimistic. Likewise, JPMorgan analyst John Ivankoe cut his rating on WEN stock to Hold from Buy on February 21, citing competitive and promotional headwinds. Ivankoe lowered the price target to $19 from $22.
Overall, WEN stock has a Hold consensus rating based on four Buys, 15 Holds, and one Sell rating. Analysts’ average price target of $20.53 implies 11.27% upside potential from current levels.
