Morning Show Topic: McDonald's Using AI to Set Prices

McDonald’s is using an artificial-intelligence pricing engine to recommend “optimal” prices for menu items at individual restaurants across the United States and some overseas markets, a system that estimates how much local customers are willing to pay and has widened price gaps between nearby stores, Reuters reported Tuesday.⁠

The tool analyzes millions of daily transactions from nearly 14,000 restaurants and generates location-specific prices for items ranging from Big Macs to senior coffee discounts. Screenshots of the franchisee interface reviewed by Reuters include messages such as “Your restaurant is showing MEDIUM SENSITIVITY to Price,” based in part on “customer willingness to pay in your area.” The platform also pulls public menu prices from nearby competitors such as Wendy’s and Burger King.⁠

The result, three franchisees told Reuters, has been larger price differences for the same products even within the same city or neighborhood. In one example cited in follow-on coverage of the Reuters reporting, a Big Mac cost $5.69 at one Fresno, California, restaurant and $6.89 at another about two miles away — a 21% gap. Reuters said it could not confirm that the engine alone caused every difference.⁠

McDonald’s says franchisees remain free to set their own prices and describes the system as a decision-support tool rather than a mandate. Five store owners told Reuters they felt pressured to follow the recommendations. A June franchisee document reviewed by the news agency shows the company tracks deviations from suggested prices in detail. Since January, internal standards have required franchisees to be “constructively engaging with McDonald’s approved Pricing Consultant and Tools.” Guidance goes out at least three times a year, and some owners said they received calls from corporate after they priced differently. 

Former franchisee Karen King told Reuters: “You don’t really have much of a choice anymore.”⁠

CEO Chris Kempczinski has said the company provides “recommended guidance” on pricing execution and that “pricing and pricing non-compliance” can come up in business reviews that affect growth and eligibility for new restaurants. The strategy is intended to lift profits at headquarters, but Reuters noted it also raises the risk of customer backlash and antitrust scrutiny if algorithms are seen as coordinating prices among independently owned stores that the company itself sometimes describes as competitors.⁠

The pricing engine has been linked in reporting to work with analytics firm Tiger Analytics. McDonald’s has said the portal is meant to help operators make smarter local decisions and create value for customers, not to dictate a single price. Franchisees still control the final ticket, the company maintains, even as the AI recommendations become a more central part of how those tickets are set.