Key facts
- McDonald's uses an AI pricing engine to recommend menu prices across its nearly 14,000 restaurants.
- The system analyzes millions of daily transactions to determine an "optimal price" for each menu item at every location.
- Customer willingness to pay in a specific area is a key input for the AI's pricing recommendations.
- Competitors Wendy's and Burger King stated they do not use AI for pricing decisions.
- Franchisees have reported increased price disparities between restaurants selling the same product.
- McDonald's described the portal as a tool providing recommendations, not a mandate.
McDonald's is reportedly employing an artificial intelligence-driven pricing engine to suggest menu prices across its vast network of nearly 14,000 restaurants, according to a report by Reuters. The system, which analyzes millions of daily transactions, uses an estimate of how much customers in individual locations are willing to pay as a key input. Franchisees have indicated that this AI tool has led to greater price differences between restaurants, even those in close proximity selling identical items.
Screenshots reviewed by Reuters show the interface informing owners about their restaurant's "MEDIUM SENSITIVITY to price," partly based on local customer willingness to pay. The platform also incorporates pricing data from competitors like Wendy's and Burger King, though both chains told Reuters they do not utilize AI for their pricing strategies.
Some franchisees have observed that the engine has widened price gaps between stores. A check of the McDonald's app in September revealed a Big Mac priced at $5.69 at one company-run store in Fresno, California, while another company-run location just two miles away charged $6.89, a 21% difference. Reuters could not definitively confirm if the AI engine was the direct cause of this disparity.
The AI platform is managed by Tiger Analytics, with McDonald's providing the operational rules and corporate objectives. These parameters have included focusing price increases on items not adjusted in two years and excluding ice cream and soft drinks from summer price hikes. Tiger Analytics declined to comment.
While franchisees officially set their own prices, five owners reported that the company exerts pressure to adhere to the AI's recommendations. A June document indicated that McDonald's meticulously tracks deviations from these suggestions. Since January, franchisees have been mandated to "constructively" engage with the company's approved pricing tools and consultants. Chief executive Chris Kempczinski reportedly mentioned in August that "pricing non-compliance in certain cases" is a factor in franchisee business reviews. The legal terms of the pricing portal caution owners that they "may be competitors" and must comply with antitrust laws. Similar dynamic pricing systems have previously faced consumer criticism, such as Wendy's in 2024 over reports of plans to charge more during peak times, which the company later clarified were misinterpretations of digital menu board capabilities. Instacart also ended a test of AI tools that displayed different grocery prices to different shoppers.