McDonald's Dynamic Pricing System Sparks Antitrust Concerns
McDonald's has been using artificial intelligence to dynamically price its menu items in the US and some global markets. The system, which estimates 'customer willingness to pay' at each location, adjusts prices according to location, with even stores in the same city having different costs for the same exact items.
A Reuters report revealed that this technology has been used since at least 2019, but it wasn't until 2023 that CEO Chris Kempczinski boasted about developing proprietary tools to evaluate pricing at individual restaurants. However, these tools have caused problems, such as recommending a $18 price for a single Big Mac.
Some franchisees have alleged that the company pressures them to use the AI tools and tracks their adherence to the platform's price recommendations. A corporate document reviewed by Reuters shows that McDonald's sends AI pricing guidance to franchisees at least three times a year, and store owners have described phone calls with corporate after they strayed from those recommendations.
The company acknowledges that using dynamic pricing could open up franchisees to legal hurdles but continues to push the platform. The pricing portal's terms of service warn that owners 'may be competitors of each other' and 'it is particularly important for all Users of the Tool to understand and comply fully with antitrust and competition laws.'