McDonald's is reportedly using AI to dynamically price its burgers

McDonald's has been using artificial intelligence to price menu items dynamically in the United States and some other markets, according to a Reuters report. The system looks for the "optimal price" that matches what customers at a particular restaurant are willing to pay, so prices shift with the location. According to the information Reuters reviewed, even two restaurants in the same city can charge different amounts for the same item.

A price gap in Fresno

Reuters saw the interface franchisees use to reach the technology. It tells operators things like "your restaurant is showing MEDIUM SENSITIVITY to price", tying that to "customer willingness to pay in your area". In Fresno, California, a Big Mac cost $5.69 at one restaurant and $6.89 at another branch two miles away, a 21 percent difference.

Franchisees describe pressure

McDonald's says franchisees are free to set their own prices. Several store owners told Reuters the company pressures them to use the AI tools: a corporate document reviewed by the outlet shows McDonald's tracks how closely operators follow the platform and records deviations from the algorithm's recommendations. Guidance is reportedly sent to franchisees at least three times a year, and the new business standards require them to be "constructively engaging with McDonald's approved Pricing Consultant and Tools".

Owners also described phone calls from corporate after they strayed from those recommendations. "You don't really have much of a choice anymore", said former store owner Karen King. Renewing a licence or opening a new location depends on the company. CEO Chris Kempczinski told investors that "pricing non-compliance in certain cases is part of those conversations".

Antitrust questions, and a denial

The pricing portal's terms of service reportedly warn owners that they "may be competitors of each other" and must comply with antitrust and competition laws. The document repeats that franchisees are "always free to determine the final price". Former FCC commissioner William Kovacic told Reuters the wording is "an acknowledgment there's a potential problem". McDonald's called the reporting "speculative and uninformed" and said the portal is "a tool, not a mandate".

According to Reuters, some version of the technology has been in use since at least 2019. In Connecticut the platform suggested charging $18 for a single Big Mac, which went viral and led to a lawsuit that is still ongoing. Wendy's, Instacart and Walmart have all drawn criticism for similar plans; Walmart CEO John Furner said: "We don't set different prices based on who you are or the time of day, and we won't."