McDonald's AI-Driven Pricing Engine Sparks Concerns
McDonald's is increasingly using artificial intelligence to guide menu prices across the U.S. and some global markets, aiming to boost headquarters' profit but risking alienating customers and attracting antitrust scrutiny.
The company's pricing engine uses machine-learning algorithms to continually analyze data from millions of daily transactions and generate what McDonald's calls 'the optimal price' at each location for each menu item.
Franchisees have reported being pressured by the company to use the AI-pricing tools, with some saying they feel compelled to take the prices. The engine has widened existing price differences for the same product between restaurants, including from neighborhood to neighborhood within the same area.
McDonald's says its franchisees are free to set their own prices, but internal documents show that the company tracks 'pricing non-compliance' by franchisees and sends AI pricing guidance to them at least three times a year.