Image Courtesy: Unsplash
McDonald’s is reportedly using artificial intelligence to recommend different prices for its menu items based on what customers in individual locations may be willing to pay. The system allows prices to vary between restaurants, potentially leaving customers paying significantly different amounts for identical meals.
The pricing platform evaluates local customer behavior and provides franchisees with recommendations tailored to their restaurants. A review of the system and interviews with franchise owners revealed substantial price differences between nearby locations, raising concerns about transparency and the growing use of algorithmic pricing. The findings were reported by Reuters in an investigation into the company’s pricing strategy.
One example involved two McDonald’s restaurants in Fresno, California. A Big Mac reportedly cost $5.69 at one location and $6.89 at another just two miles away, representing a difference of approximately 21%. The platform also assigns restaurants sensitivity ratings based on customers’ estimated willingness to pay.
McDonald’s maintains that franchisees retain control over their final prices. However, several owners told Reuters that corporate pressure makes ignoring the recommendations difficult. Internal documents reportedly show that the company tracks compliance, while updated business standards require franchisees to engage with approved pricing consultants and tools.
Former franchise owner Karen King described the situation bluntly, saying, “You don’t really have much of a choice anymore.” CEO Chris Kempczinski has also acknowledged that pricing compliance can enter discussions about franchise contract renewals.
The technology has previously attracted controversy. In one case, the platform reportedly recommended charging $18 for a Big Mac at a Connecticut restaurant. The recommendation went viral and preceded a lawsuit in which the franchisee alleged discriminatory treatment by the company. The case remains ongoing.
Dynamic pricing has also faced public backlash elsewhere. Wendy’s encountered criticism after discussing similar plans in 2024, while Instacart faced scrutiny for testing algorithmically determined price differences between shoppers. Walmart likewise faced concerns over digital price labels, prompting its leadership to reject personalized pricing.
McDonald’s says its platform provides recommendations rather than mandates and describes criticism of the system as speculative. However, its use raises questions about competition laws, particularly when competing franchisees rely on the same pricing guidance.
The controversy comes as McDonald’s faces weakening demand among lower-income customers. Kempczinski has said traffic from this group declined nearly double digits over two years, highlighting the challenge of balancing revenue growth with affordability.
