Recap: McDonald's has made several attempts to deploy AI across its businesses over the past few years, not all of them successfully. A recent extensive report sheds light on one area where the fast-food giant has had a long and potentially lucrative history with machine learning and algorithms: dynamic pricing.
Several sources, including store owners, recently explained to Reuters how McDonald's encourages and sometimes pressures restaurants to set prices according to an AI algorithm. The outlet also viewed screenshots of an AI pricing tool taken in August.
The system aims to determine how much customers are willing to pay by reviewing data from millions of transactions across the fast-food chain's nearly 14,000 restaurants, as well as prices from online menus at nearby rival chains such as Wendy's. The tool might warn a franchise owner that their restaurants are exhibiting "medium sensitivity" to prices based on local customers' "willingness to pay." Although Wendy's says that it does not currently use AI to set prices, the chain got into trouble over plans to test the practice in 2024.
Although store owners can set prices with or without AI based on local costs, the algorithm might widen disparities even between nearby restaurants. For example, a company-run McDonald's in Fresno, California, might sell Big Macs for $5.69, while another restaurant just two miles away might charge $6.89 – 21% more.
McDonald's has been using AI-based pricing in one form or another since 2019, and in one extreme case, a franchise owner sued the company after feeling pressured to charge $18 at a store off a Connecticut turnpike.
The company claims that store owners are free to choose whether to follow the algorithm, but sources told Reuters that they have little choice. Some store owners described receiving phone calls from the company asking why they had strayed from the algorithmic recommendation, and McDonald's tracks deviations in detail. The decision might also affect whether franchisees are allowed to open more restaurants. In some cases, owners might also clash with corporate after setting prices higher than the AI's suggestion to keep up with local maintenance and labor costs.
Furthermore, the company explicitly directs franchise owners to comply with antitrust laws, acknowledging that AI-based pricing could draw accusations of price fixing or collusion. McDonald's warns that nearby franchises may view each other as competitors.
McDonald's has tried unsuccessfully to deploy AI in multiple customer-facing ways over the past few years. In 2024, the company ended an agreement with IBM to take orders via chatbots, something DoorDash now plans to do via Apple Messages. In 2025, McDonald's hiring chatbot exposed the personal data of 64 million applicants. Later that year, the company pulled an AI-generated Christmas ad after massive backlash.