A growing number of restaurants across the U.S have quietly adopted surge pricing strategies, reaping substantial profits from the controversial practice.

Among those implementing fluctuating menu prices during peak hours are barbecue chain Tony Roma’s and nearly 100 other small restaurants, following the lead of fast-food giant Wendy’s, which plans to introduce similar pricing models next year.

Sauce Pricing, a Los Angeles-based startup backed by industry heavyweights including founding members of Sweetgreen, Uber, and Airbnb, provides the software specialising in dynamic pricing.

According to the company, restaurants can increase item prices by 10% to 20% during busy periods, resulting in customers potentially paying an additional $1 to $2 for a $10 item.

Reports suggest that some establishments have seen their profit margins double as a result of surge pricing.

Annual profit

One example cited is Las Vegas-based casual eatery Rachel’s Kitchen, which reportedly earned an additional $64,000 in annual profit across its three stores.

The company’s CEO, Debbie Roxarzade, confirmed the use of Sauce Pricing’s software, stating that price fluctuations are capped at 15% and apply only to delivery orders from platforms like Doordash, UberEats, and Grubhub.

While Tony Roma’s did not respond to requests for comment, ice cream chain Carvel, listed as a Sauce Pricing customer, denied any affiliation with the startup when contacted by reporters.

The surge pricing model, reminiscent of the “Uber-style” dynamic pricing, allows businesses to adjust prices based on demand.

However, it has sparked criticism from some consumers, particularly in light of rising inflation and food prices. Wendy’s recent announcement of plans to pilot dynamic pricing drew ire from customers on social media platforms.