How much should a Big Mac cost, and who gets to decide? A new report suggests McDonald's has been leaning on artificial intelligence to help answer that question on a store-by-store basis, using transaction data to estimate what customers in different areas may be willing to pay.
If so, customers can end up seeing different prices at restaurants that are very close together.
Here's what to know
As Kotaku reported, Reuters found two corporate-owned McDonald's locations in California, about two miles apart, with Big Macs priced at $5.69 and $6.89.
This pricing approach isn't new. Reuters said McDonald's has used some form of algorithmic pricing since 2019. But now, McDonald's is allegedly pushing restaurants to adopt newer AI tools.
In screenshots reviewed by Reuters, the system described some stores as having "MEDIUM SENSITIVITY to Price" tied to "customer willingness to pay in your area."
The company pushed back on the report, saying franchisees control their own menu prices and calling the coverage "speculative and uninformed." It added that AI recommendations were "a tool, not a mandate."
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Even so, Reuters said five franchise owners told the outlet they felt pressure to use the pricing tools.
According to the report, internal communications showed that McDonald's told franchise owners they'd need to begin "constructively engaging with McDonald's approved Pricing Consultant and Tools" under its new rules and standards in January.
Reuters also reported that McDonald's HQ monitors stores that move away from recommended prices. And the disagreements are not only about raising prices: some owners have resisted pressure to cut prices on cheaper items intended to bring in more customers.
More background
The setup may also create legal concerns. In some areas, nearby McDonald's franchises can be treated as competitors, which could create problems if owners change prices in coordination with one another.
Reuters reported that the software itself acknowledges that risk, telling operators they "may be competitors" and urging them to consult their own lawyers.
Where can I learn more?
The reported use of AI by McDonald's for pricing is part of a push by major consumer brands to use AI in operations and customer interactions, as these articles expand on.
• McDonald's faced backlash after an AI hiring platform exposed applicant data at massive scale.
• Restaurants using Winnow found AI systems analyzing patrons' habits also changed kitchen decisions.
• PepsiCo expanded AI tools for sales as major food brands automate operations.
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