McDonald's is allegedly encouraging its franchise owners to adopt AI-powered pricing tools that analyze millions of customer transactions to determine the "optimal price" for menu items at individual restaurants. This approach has reportedly resulted in substantial price differences for identical burgers at locations just a few miles apart.
According to a Reuters report, which cited interviews with franchise owners and reviewed screenshots of the pricing engine, some McDonald's locations are categorized by their "sensitivity to Price" based on "customer willingness to pay in your area." In one instance, two corporate-owned stores separated by only two miles in California displayed a price difference of over a dollar for the same Big Mac, with one selling for $5.69 and the other for $6.89.
While McDonald's has employed algorithm-based pricing systems since 2019 and maintains that franchise owners set their own prices, the company appears to be increasing its focus on these new AI tools. Sources suggest that McDonald's corporate headquarters monitors stores that deviate from recommended pricing, sometimes creating friction with owners. Many owners reportedly resist the company's push for lower prices on less expensive items, aiming to draw more customers in.
Recent company directives, starting in January, have reportedly mandated franchise owners to "constructively engage with McDonald’s approved Pricing Consultant and Tools." The company is reportedly aware that AI-driven pricing can generate negative publicity and potentially lead to legal issues. Software for the pricing engine includes a warning to owners that they "may be competitors" and advises them to consult their own legal counsel regarding any price-related concerns, acknowledging the risks associated with coordinated pricing strategies among nearby locations.