A Big Mac in Fresno, California cost $5.69. Two miles down the road, at another McDonald’s, the same burger cost $6.89. That 21 percent gap, found by researchers, sits at the center of a Reuters report that McDonald’s has been using artificial intelligence to set menu prices store by store in the US and some other markets.
The algorithms estimate what customers at each location will pay and look for the “optimal price” to match. Reuters saw the franchisee interface. One message read: “your restaurant is showing MEDIUM SENSITIVITY to price,” based on “customer willingness to pay in your area.” Even stores in the same city can charge different amounts for identical items, according to documents Reuters reviewed.
Free to choose, in theory
McDonald’s says franchisees set their own prices. Several store owners told Reuters otherwise. A corporate document shows the company tracks adherence to the platform and notes deviations from its recommendations. New business standards require franchisees to be “constructively engaging with McDonald’s approved Pricing Consultant and Tools,” and company documents show AI pricing guidance goes out at least three times a year.
Owners described phone calls with corporate after straying from the suggestions. “You don’t really have much of a choice anymore,” said former store owner Karen King. Corporate controls license renewals and new locations, and CEO Chris Kempczinski recently told investors that “pricing non-compliance in certain cases is part of those conversations.”
The pricing portal’s terms of service carry their own warning that owners “may be competitors of each other” and should comply fully with antitrust law, while repeating that franchisees are “always free to determine the final price.” Former FCC commissioner William Kovacic told Reuters that language is “an acknowledgment there’s a potential problem.”
McDonald’s called the reporting “speculative and uninformed.” The portal, it said, is “a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions.”
A history of misfires
Reuters traced some version of the technology to at least 2019. In 2023 Kempczinski told investors the company had built proprietary tools to evaluate pricing at individual restaurants. Trouble followed. The platform reportedly suggested a Connecticut franchisee charge $18 for a single Big Mac, which went viral and led to a lawsuit, still ongoing, in which the owner alleges the brand tried to push him out of the system for discriminatory reasons. Other franchisees say the tools urged big increases during the pandemic and afterward as inflation climbed. McDonald’s earns much of its money from a percentage of each store’s revenue.
Other companies have backed off similar ideas. Wendy’s said in 2024 that remarks about “dynamic pricing” were misconstrued. Instacart ended its AI pricing tools after testing different grocery prices for different shoppers. Walmart CEO John Furner promised after backlash over digital shelf labels: “We don’t set different prices based on who you are or the time of day, and we won’t.” Yum Brands, owner of KFC and Taco Bell, is going the other way, with a drive-thru menu that changes by the car approaching the window.
McDonald’s stock has fallen 30 percent since February. Kempczinski blames low-income traffic “declining nearly double digits” over two years.
