Mar 2, 2024 12 min read

Geriatric Pregnancy vs Sweetbreads

Geriatric Pregnancy vs Sweetbreads
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Friends of Branded!

Happy Saturday and I hope you had a great week.

Wendy’s planning Uber-style ‘surge pricing’ where burger prices fluctuate based on demand,” was the title of the article and below is a picture of the cover of the NY Post on February 27th.

My older brother has always been a best friend and mentor and the headline made me think of something he once said to me, “don’t do anything that will put yourself in the NY Post.”

Much has been written and reported on Wendy’s announcement about its plans to implement a “dynamic pricing” strategy in 2025 which would have customers facing different prices depending on a number of factors. On an earnings call earlier this week, Wendy’s CEO, Kirk Tanner explained that the chain will spend $20mm to add digital menu boards to restaurants to reflect the pricing changes.

Given how much coverage, clarifications and media attention has been spent on this announcement, is there really anything I can add to Wendy’s surge pricing debacle? I guess I think I can or at least I’m willing to accept the challenge.

Let’s get it on!

Since I pride myself on being a straightshooter, and as Doug Quinn, one of the world’s greatest bartenders (I know that’s a bold statement, but that doesn’t mean it isn’t true) and now the owner of Hudson Malone, likes to say, “Stand Tall, Choose Sides.” Thank you, Doug, for years of friendship, hospitality, and education. I'm choosing sides!

So, in the spirit of one of Mr. Quinn’s most important rules and for avoidance of any doubt, I’m on Team Wendy’s!

Do I think this announcement was anything other than a failure by Wendy’s? Nope, it was a failure, a fall down, and I dare say a sh#tshow. Did it reach the threshold of Bud Light’s ill-fated Dylan Mulvaney campaign or Coke’snew Coke” debacle? I would say that it most certainly did not, but then again, it’s still early and I’ll leave that topic to experts in the areas of PR, Communications and Chaos Management.

There’s plenty to read about Wendy’s “surge pricing” announcement, and I’ll share just one link of a video by friend of Branded, Paul Molinari and the team at Popcorn GTM: Fast Food Surge Pricing.

Why am I on Team Wendy’s? B/c it’s crystal clear what they’re exploring or at least trying to do is both a good and necessary thing for the restaurant industry.

This whole Wendy’s issue reminded me of what Danny Meyer and his Union Square Hospitality Group tried to do back in 2015 with the radical move of eliminating tipping entirely from his restaurants. At the time, USHG’s thinking was how outdated the practice of tipping was and they instead raised menu prices in an effort to embrace a fair living wage policy into the company. At the time, USHG’s “Hospitality Included” policy was an ambitious and most well-intentioned plan. USHG wasn’t the first restaurant group to eliminate tipping, but the tallest trees get the most wind and there aren’t many taller trees in the hospitality industry than Danny Meyer and USHG. After five years of mixed success, USHG reverted to a standard tipping model during the pandemic as restaurants profits collapsed and layoffs spiked.

The reason I chose the Wendy’s “surge pricing” debacle for the Top of the Fold this week isn’t b/c I want to debate the issue b/c in my opinion (and just like Poppie), there is no debate.

Dynamic pricing already exists in one shape or another, and what we’re now seeing is the opportunity to modernize revenue management for restaurants. Dynamic pricing needs to be embraced and the digital transformation that the industry is experiencing will only improve how it's done. Technology will make revenue management more transparent for all parties and that’s an awesome thing.

However, the criticality and existence of dynamic pricing isn’t why I elected to highlight the Wendy’s story. It’s b/c this issue is yet another example of how different the hospitality and specifically the restaurant industry is from all others.

The argument I heard the most this week from those in favor of dynamic pricing is how this pricing policy or strategy already exists in so many other industries (hotels, airlines, ride-share services, concert & events ticketing, etc.) and that it's unfair not to allow restaurants to embrace this as well. Why is the restaurant industry being treated differently?

That’s my point! The restaurant industry is different and unlike all these other industries. Please understand, I’m fully aware that there are graveyards filled with headstones of people who say things or believe that “this is different.” Respect, acknowledged, and agreed. But what if this industry is different? What if the relationship between the business (restaurant) and its customer (guest) is different?

The relationship in the restaurant industry between the operator and guest is a most unique, high touch and personal one. We may not like it when Uber changes its pricing as soon as it starts to rain, but the relationship we have with a car service isn’t the same as the one we have with restaurants. I’m not saying it’s better or worse. I’m saying it’s different.

The relationship between an operator and a guest isn’t just business, it’s personal. The guest is literally trusting the business with something they’re going to consume (and ideally enjoy) and there’s a level of intrinsic trust that goes along with that. Food & beverage consumption is a necessity, but it’s also where so many find joy and the experience often includes social engagement or a break from whatever else we’re doing.

There are other less emotional reasons why the restaurant industry is different. It’s a most fragmented industry with over two-thirds of the industry comprised of small & medium sized business (“SMBs”) and independents.

How does that compare to other industries? Four airlines control about 85% of the flights in this country. You don’t like the price; your choices are limited. That concert you want to go to? Hard to believe the artist’s engagement isn’t anything other than limited (even the legendary Billy Joel put an end date on his Madison Square Garden residency). The three most concentrated industries in the US are (i) information services; (ii) transportation & warehousing; and (iii) utilities.

Having a meal or grabbing some food, at all levels, isn’t hard to do. We have a most fragmented and I dare say saturated restaurant market. Here’s comes a not awesome factoid, there are too many restaurants, seats and options for guests and leaving all emotional connections with your favorite restaurants aside, this saturation makes the industry’s embracement of change, and the adoption of best practices that other industries benefit from a most meaningful challenge.

This isn’t a complaint or a “woe is the restaurant industry” moment. Readers of the H^2 are fully aware of my enthusiasm and confidence in the people that comprise this amazing industry. We will figure this out and make it happen. We’ll also do it a way that demonstrates respect, appreciation, fairness and transparency with our guests, b/c this industry, as much as any, is a partnership between operators and their guests.

The restaurant industry is among the most misunderstood industries anywhere in the world b/c customers project their guest experiences onto the business despite having little to no understanding of the workflow and the complexity of the operations.

I was at an event earlier this week and I loved it when one of the hosts talked about the incredible level of sophistication that it takes successful Quick Serve Restaurants (“QSR”) to make their offerings consistent across the cities, states and across the globe. That’s a really hard thing to do and often goes unnoticed and is certainly under-appreciated.

Yes, Wendy’s could have done a better job with their announcement and strategy around dynamic pricing. I’m Branded’s “Finance Guy” and there are people at Branded and elsewhere that are better at marketing than I am, but I think this “dynamic pricing” or “surge pricing” necessity for the industry needs a makeover or at least a rebranding.

That’s the reason for the title this week, “Geriatric Pregnancy vs Sweetbreads.” You had to have been at least a little curious about the randomness of the title, right?

The definition of Geriatric Pregnancy is women who are 35 years or older at their estimated delivery date. Historically, pregnancies at this age or older are considered at higher risk – for patient and fetus – for various reasons. Thanks Doctor, understood and I get it, but now tell me a single customer, whoops, I mean patient, that likes to be called a “Geriatric” in connection with their becoming a mother?!?

On the other hand, Sweetbreads is a culinary name for the thymus or pancreas typically from a calf or lamb. Sweetbreads have a rich, and slightly gamey flavor. Let’s be clear, there is nothing ‘sweet’ or ‘bread’ like in Sweetbreads. In a cookbook published in 1949, American chef James Beard included recipes for sweetbreads. This is marketing genius! Who doesn’t like the sound of something called “sweetbread?” Sounds like a Cronut or a something delicious you’d find at your favorite bakery.

Dynamic pricing, surge pricing or whatever naming convention gets embraced will need a complete and well executed plan and the restaurant industry will get it done. Will there be missteps along the way, of course there will, but it will get done b/c it needs to get done!

For the time being, as I used above, I’m going to use the term “Revenue Management” as my naming convention for dynamic and surge pricing and specifically in connection with process of how restaurants will combat rising food and labor costs. Who can be offended by the term “Revenue Management.”

I’ll close out the Top of the Fold with a shoutout to Burger King who responded to Wendy’s ‘dynamic pricing’ with an announcement of free Whoppers. This industry is truly a community, but we’re also in fierce competition for guests, so when Wendy’s had its stumble, Burger King jumped at the opportunity with a social media post and a customer acquisition strategy to bring people to its App. Burger King Just Responded to Wendy's 'Dynamic Pricing' with Free Whoppers and It's a Stroke of Genius

There aren’t many opportunities for me to leverage a quote from Jim Belushi and Rob Lowe’s 1986 film About Last Night, but this is one of them! "Don’t ever lose your sense of humor!"

The digital transformation the restaurant industry is experiencing took a little bit of a hit this week with the Wendy’s debacle, but only a small one.

I applaud Wendy’s and the leadership position they took. I understand they have some damage control to do, but don’t for one second think Revenue Management isn’t going to be a big part of this industry going forward. It needs to, it will and it’s already happening.

This week’s edition is fully loaded or as it said on my birth announcement (which I saw for the very first time this week), despite being a premature baby, I was “fully packed” (funny b/c it’s true).

I wish you a wonderful weekend and as always, it takes a village.

After sharing the above thoughts on the topic Revenue Management in the restaurant industry, I feel like the trend is my friend and I want to keep this going.

Let’s kick off with Friend of Branded, Sterling Douglass, the CEO of one our most important positions in our portfolio, Chowly.

Mr. Douglass jumped into the Wendy’s debate with what I thought was a thoughtful LinkedIn post and the comments section imploded.

Here’s the post if you’d like to see it for yourself: Sterling Douglass on Wendy's Surge Pricing

If you want to know why Branded loves Chowly, it’s the integrated tech-stack they bring to the SMB sector and how they aspire to be an ally to operators. When it comes to Dynamic Pricing, Chowly just last month helped operators put over a quarter million dollars back into their pockets (and we’re talking about profits here, not revenues). This is a company that is committed to helping restaurants innovate and succeed. That’s on branded for Branded!

And it’s not possible for me to write about Dynamic Pricing without bringing Branded’s friend Ashwin Kamlani, CEO at Juicer into the mix.

Juicer Pricing is the restaurant industry’s real-time revenue management and dynamic pricing solution. Juicer provides restaurant revenue management, including dynamic pricing on 3rd party delivery channels and advanced competitive intelligence, to optimize profits, strengthen market position, and protect guest satisfaction.

Why is the work Juicer is doing important and why is revenue management for restaurants so critical, according to Medallia's research, 73% of consumers welcome the opportunity to get special offers through dynamic pricing. The key here and what the industry with companies like Juicer will get right, is to use digital menu boards and dynamic pricing to be transparent with guests and to use revenue management to incentivize off-peak visits and menu exploration. This will help restaurants utilize inventory more efficiently and also address labor costs.

If you want to know why I’m obsessing on this issue of revenue management is b/c it’s critically important for the industry to get this right and the guest to understand this can benefit both sides (the operator and guest).

In the spirit of fairness, since I shared a LinkedIn post by Mr. Douglass above, allow me to share one from Mr. Kamlani. Ashwin is a legendary video walker & talker, enjoy.  Ashwin Kamlani on Dynamic Pricing

Readers of the Hospitality Headline, that are interested in learning more about Branded’s portfolio companies, investment strategies and future opportunities, are invited to explore becoming part of our Access Hospitality Network.


In today’s episode of Hospitality Hangout, Michael Schatzberg “The Restaurant Guy” and Jimmy Frischling “The Finance Guy” are joined by Clinton Anderson Chief Executive Officer of HotSchedules (powered by Fourth).

You can tune in on SpotifyAppleAmazoniHeart, or your favorite listening platform!

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About ACG New York

Founded in 1954, ACG is the premier M&A deal-making community with a mission of driving middle-market growth. ACG’s global network operates within 61 local markets worldwide and comprises more than 100,000 middle market professionals who invest in, own and advise growing companies. ACG provides events, conferences, bespoke meetings, deal-sourcing forums, unique experiences, educational seminars, and numerous benefits to non-members and members alike.

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That’s it for today!

See you next week, (about the) same bat-time, same bat-channel.

It takes a village!

Jimmy Frischling
Branded Hospitality Ventures
235 Park Ave South, 4th Fl | New York, NY 10003

Branded Hospitality Ventures ("Branded") is an investment and advisory platform at the intersection of food service, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its portfolio companies through investment, strategic counsel, and its deep industry expertise and connections.

Learn more about Branded here: Branded At-A-Glance February 2024

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