McDonald's AI Pricing Tool Sparks Franchisee Concerns

McDonald's is using AI to set dynamic menu prices across US restaurants. The company's pricing engine uses machine learning to study data from millions of daily transactions and suggests an 'optimal price' for each item at each location.

The tool takes into account how much customers in a given area are willing to pay, leading to varying prices between nearby stores. In Fresno, California, one McDonald's location sells a Big Mac for $5.69, while another just two miles away charges $6.89, a 21% premium.

McDonald's says franchisees are free to set their own prices but have required them to engage with the approved pricing tools since January. Some store owners feel pressured to follow its recommendations.

The AI-powered pricing engine is central to McDonald's turnaround plan, which aims to attract low-income customers with affordable prices. However, there are concerns about antitrust scrutiny and public backlash, as seen in cases involving Wendy's and Instacart.