What Wendy’s and Kellogg pricing messaging missteps reveal about consumer disconnect

Recent communication missteps by top executives at Wendy’s and WK Kellogg Co. over pricing strategies have revealed a disconnect between food company leaders and average consumers. Wendy’s faced swift backlash after consumers interpreted CEO Kirk Tanner’s comment on a February earnings call about the chain using “dynamic pricing” as “surge pricing,” sparking confusion and anger around the idea of a burger being more expensive at lunchtime. A few days later, WK Kellogg CEO Gary Pilnick said in a CNBC interview that cereal for dinner is becoming more common, “and we would expect that to continue as that consumer is under pressure.” Check out the latest Ad Age events and award programs Both brands dealt with negative headlines as the comments drew widespread attention on social media last week. Wendy’s sought to ease concerns by saying that Tanner’s comments about forthcoming installations of digital menu boards were “misconstrued in some media reports,” saying that it does not plan to “raise prices when demand is highest at our restaurants.” But that did not quell critics, including Sen. Elizabeth Warren. .@Wendys is planning to try out “surge pricing” — that means you could pay more for your lunch, even if the cost to Wendy’s stays exactly the same. It’s price gouging plain and simple, and American families have had enough.https://t.co/dbJuhAM6vp— Elizabeth Warren (@SenWarren) February 28, 2024 Meanwhile, Kellogg continued to deal with calls for a boycott of the maker of Special K, Frosted Flakes, Rice Krispies and other big cereal brands, with critics suggesting Pilnick’s comments were evidence of corporate greed. “Families are trying to feed themselves healthier, affordable meals and hearing messages like surge pricing and ‘Just eat cereal for dinner’ doesn’t inspire consumers to those brands,” said Barry Thomas, a senior analyst at Kantar. Kellogg’s actually began pitching Frosted Flakes, Frosted Mini Wheats and Froot Loops as dinner options in a 2022 ad that urged parents to “give chicken the night off.” That ad did not cause much of a stir at the time—but Pilnick’s comments have struck a nerve, perhaps revealing that consumers have grown more sensitive to such messaging as food inflation remains stubbornly high. On social media, consumers have posted videos that seem to show store freezer sections full of Kellogg’s Eggo waffles (which are made by a separate company, snack-focused Kellanova, after Kellogg Co. separated the businesses in 2023). Others have pointed out the store-brand alternatives to Kellogg’s cereals at other grocery stores such as Aldi and Meijer. @no.one.everyone.1 I guess my Walmart shoppers got the memo #boycott #kelloggs #eattherich #billionaire #workingclass ♬ Ed bassmaster - The Potted Oasis @mirithesiren Replying to @copypaste Alternative Cereals!! #fyp #aldi #aldifinds #alditiktok #aldihaul #groceries #kelloggs #cereal #boycott ♬ original sound - mirithesiren WK Kellogg Co. representatives did not respond to a request for comment. Craig Dunaway, chief operations officer for Penn Station East Coast Subs, suggested consumer attitudes have changed since the peak of the pandemic. “During Covid, the average consumer knew that restaurants and companies were struggling with inflation and supply chain issues,” he said. “There was this unwritten social contract, this understanding of why prices were high. But now, being charged more because companies can ‘get away with it,’ that violates that contract, and now I’m no longer being charged that fair price.” The ire directed at Wendy’s and Kellogg is also a warning sign for executives to be mindful that messages aimed at financial audiences can spread widely—especially in the age of TikTok, X and other social media outlets, where consumers are quick to lash out at corporations. “It’s important to remember that there is no separation between business press and consumer press,” said Matt Talbot, co-founder and chief creative officer at WorkInProgress, whose clients include Domino’s. “Imagine everyone in the world will hear what you’re saying, consumers included.” The companies even gave an opening to competitors. In response to Wendy’s gaffe, competitor Burger King took to X, formerly Twitter, to give away a free Whopper with a minimum $3 purchase in the Burger King app. “The only thing surging at BK is the 🔥. We don't believe in charging people more when they're hungry,” the brand posted. the only thing surging at BK is the 🔥. we don't believe in charging people more when they're hungry. FREE Whopper or Impossible Whopper with $3+ purchase in the BK App through Friday at part U.S. rest. terms apply: https://t.co/HblzQ1uRIq— Burger King (@BurgerKing) February 28, 2024 All food companies, though, are dealing with higher costs, so the ability to loudly tout cheaper prices may be limited. Food costs accounted for over 11% of the average consumer’s income in 2022, according to the U.S. Agriculture Department, the highest it’s been in 30 years. And while food inflation has moderated some since then, dining out costs have remained stubbornly high. “Companies will be reluctant to promote a value message too much right now,” said Tim Calkins, a marketing professor at Northwestern University’s Kellogg School of Management. “Every company is looking at higher input costs. The problem with talking about value right now is that your prices are probably up, and might have to go higher.” Calkins added that lowering prices in the short term could lead to a price war and smaller margins, forcing prices back up again. Still, there are ways for brands to highlight affordable options, including rewards points and value menus. Driving reward sign-ups for loyalty programs isn’t new, but could be more appealing to consumers these days as they look for dining-out deals. Domino’s late last year began promoting “emergency pizzas” to rewards members as a kind of “buy-one-get-one” promotion. Also read: 3 ways brands can grow their loyalty programs “People want to know that you are giving them something of good value, and loyalty programs are a good way to do that,” said Dunaway. “For QSRs (quick service restaurants) they could have certain periods of the day where they don’t give as many points, say at the lunch rush, but prices stay the same. That would be a different way to package what could be perceived as a negative.” Other brands have shown sensitivity to pricing concerns. For instance, in January, Taco Bell rolled out its Cravings Value Menu with 10 items under $3. “As our consumers are looking for more ways to save, we’re committed to expanding on our value offerings through new menu items and digital offerings that deliver quality and abundance,” said Taylor Montgomery, Taco Bell’s chief marketing officer, in a press release announcing the menu. Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here

What Wendy’s and Kellogg pricing messaging missteps reveal about consumer disconnect

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