McDonald's is facing questions over how much influence artificial intelligence has over menu prices after franchisees said they felt pressure to follow the company's AI-powered pricing recommendations.
The claims came as the fast-food giant defended its system, insisting that artificial intelligence does not set menu prices and that restaurant owners remain responsible for the final decision.
Sources reported that McDonald's pricing engine analyses millions of transactions and recommends what it considers the optimal price for individual menu items at individual restaurants. The system can assess local demand and estimated willingness to pay, while also drawing on competitor pricing information.
At the same time, the company says it does not use dynamic pricing or charge individual customers different prices based on their personal willingness to pay. The report has also prompted online discussion about the role of AI in restaurant pricing.
McDonald's AI Pricing Tool Faces Franchisee Pressure Claims
Reuters reported that its investigation was based on screenshots of McDonald's pricing system and interviews with nine sources with first-hand knowledge of the company's strategy. The publication found that the technology generates restaurant-specific recommendations after processing large volumes of transaction data.
One example highlighted the difference customers can encounter between nearby restaurants. Reuters found a Big Mac listed at $5.69, approximately £4.26, at one company-operated restaurant in Fresno, California, while another company-operated location roughly two miles away listed the same burger at $6.89, approximately £5.16.
The report did not establish that the AI system caused that particular price gap, making it important not to treat the comparison as proof that the algorithm set either price.
The more contentious issue concerns the relationship between McDonald's corporate operation and its franchisees. Five franchisees told Reuters they had experienced pressure to use the pricing tools, despite the company maintaining that owners can reject the recommendations.
It was also reported that a June franchisee document showed McDonald's records how far restaurants deviate from its pricing recommendations.
The issue matters because McDonald's franchise system leaves individual restaurant operators with responsibility for their own pricing decisions. The pricing portal's terms of service also state that franchisees are free to determine the final price.
McDonald's chief executive Chris Kempczinski has also discussed pricing compliance in relation to franchisee performance, according to reports. That adds another layer to the dispute because, although McDonald's describes the recommendations as optional, Reuters reported that pricing non-compliance can form part of franchisee business reviews.
McDonald's Denies Dynamic Pricing and Individualised Big Mac Prices
McDonald's responded directly on 1 October with a statement titled 'Separating Fact from Fiction: AI Does Not Set Prices at McDonald's'.
The company also rejected the idea that customers are individually assessed and charged according to how much the system estimates they are willing to pay. Instead, McDonald's says the technology looks at restaurant-level market conditions, including geographic factors, demand and other circumstances that can affect a location's pricing.
That distinction is central to the controversy. A system that recommends different prices for different restaurants is not the same as a system that changes the price for a particular customer.
McDonald's says its tool does not alter prices during the day based on demand, meaning the system does not operate as the kind of real-time surge pricing associated with some other services.
The company has also defended the use of pricing analytics as a normal business practice and says its franchisee value assessments consider the overall customer experience rather than price alone.
Online discussion has also focused on the possibility that AI could influence restaurant-level prices. Those comments reflect individual reactions rather than representative polling and should not be treated as evidence of wider customer sentiment.
The debate also comes as US regulators examine personalised pricing more closely. The US Federal Trade Commission has proposed an enforcement policy focused on businesses using personal data to estimate what individual consumers are willing to pay.
The proposal is bigger than McDonald's and does not establish that the company's pricing system falls within the policy.
For customers, the Reuters findings raise questions about how much freedom franchisees actually feel they have when corporate records document how their prices differ from the recommendations.
