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Door staff@engadget.com (Lawrence Bonk) - 29 Sep 2026
McDonald's has been using artificial intelligence to dynamically price menu items in the US and some global markets, according to a report by Reuters. This involves finding the "optimal price" to match what a particular store's patrons would be willing to pay.
This fluctuates according to location, and even stores in the same city can have different cost amounts for the same exact items, according to information reviewed by Reuters. This is basically surge pricing, like with ride-share platforms, but for hockey puck burgers that have been sitting under a hot lamp.
Reuters got a look at the interface that franchisees use to access this technology and it's pretty creepy. Messages show stuff like "your restaurant is showing MEDIUM SENSITIVITY to price" based on "customer willingness to pay in your area." Cost differences at nearby locations can be stark. Researchers found that a Bic Mac at a Fresno, California store cost $5.69, but the same burger cost $6.89 at another branch two miles down the road. That's a 21 percent difference.
McDonald's says that franchisees are free to set their own prices. This could be true in theory, but a handful of store owners told Reuters that the company pressures them to use the new AI tools. A corporate document reviewed by the publication shows that McDonald's tracks adherence to the platform, and notes any deviations from the algorithm's price recommendations.
Additionally, the company has begun requiring franchisees to be "constructively engaging with McDonald's approved Pricing Consultant and Tools" as part of its new business standards. This is according to an internal communication sent to franchisees. Company documents reportedly show that McDonald's sends AI pricing guidance to franchisees at least three times a year.
Store owners also described phone calls with corporate after they strayed from those recommendations. "You don't really have much of a choice anymore", said former store owner Karen King. It's worth noting that McDonald's corporate holds a lot of power over franchisees, as it can decide whether they are allowed to renew their license or open new locations. McDonald's CEO Chris Kempczinski recently told investors that "pricing non-compliance in certain cases is part of those conversations" regarding contract renewals.
The company acknowledges that using this dynamic pricing system could open up franchisees to legal hurdles, all while continuing to push the platform. The pricing portal's terms of service reportedly warns that owners "may be competitors of each other" and "it is particularly important for all Users of the Tool to understand and comply fully with antitrust and competition laws." The document also reiterates that franchisees are "always free to determine the final price," thus potentially absolving corporate from any antitrust concerns.
The document also suggests that these store owners should seek independent legal counsel. Former FCC commissioner William Kovacic told Reuters that the language in the service agreement is "an acknowledgment there's a potential problem" given recent scrutiny of pricing algorithms.
McDonald's has decried Reuters' reporting as "speculative and uninformed." The company says the pricing portal is "a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions."
The company has been using some version of this technology since at least 2019, according to Reuters. In 2023, however, CEO Kempczinski boasted to investors that it had developed proprietary tools to evaluate pricing at individual restaurants.
It wasn't long before these tools caused a serious problem. They maximized for price, at the expense of all else. The platform suggested to a Connecticut franchisee that the location should charge $18 for a single Big Mac. This went viral and led to a lawsuit in which the store owner alleged that the brand tried to push him out of the franchisee system for discriminatory reasons. That case is still ongoing.
Other franchisees have alleged that some version of these tools recommended large price increases during the pandemic and even afterwards, as inflation continued to soar. There's a reason why McDonald's wants its franchisees to charge as much as possible for every single item on the menu. The company makes much of its money by taking a percentage of each store's total revenue.
The public seems to tolerate this type of thing when it comes to ride-sharing platforms, but not anywhere else. Wendy's got into some hot water in 2024 when its CEO announced plans for "dynamic pricing." This forced the company to say the comments were misconstrued and now insists it doesn't use customer data for its pricing.
The same thing happened to Instacart, which tested a platform that showed different grocery prices to different shoppers depending on a number of algorithmically-decided variables. The outcry was swift and now the company says it will also never use personal information to determine item prices. It has likewise ended its use of AI pricing tools.
Walmart recently unveiled a plan to mandate digital price labels at stores, which seems like the perfect way to institute dynamic pricing tailored to each consumer. Customers also rebelled at this notion, forcing CEO John Furner to vow to not use personal information to influence prices. "We don't set different prices based on who you are or the time of day, and we won't," he wrote. "Whether you're buying groceries or electronics on a hot afternoon or in a sudden rush for an item, it's never a reason to charge you more."
Despite pushback, some companies are still trying to get aboard the AI hype train. Yum Brands, which owns KFC and Taco Bell, has gone all-in on the technology. It's developing AI platforms for just about everything, including a dynamic drive-thru menu that changes based on the car approaching the window.
As for McDonald's, business has been declining in recent months. The stock value has plummeted by 30 percent since February. CEO Kempczinski said this is due to low-income consumer traffic "declining nearly double digits" over the past two years. In other words, nobody has any money and this is something surge pricing probably can't fix.
This fluctuates according to location, and even stores in the same city can have different cost amounts for the same exact items, according to information reviewed by Reuters. This is basically surge pricing, like with ride-share platforms, but for hockey puck burgers that have been sitting under a hot lamp.
Reuters got a look at the interface that franchisees use to access this technology and it's pretty creepy. Messages show stuff like "your restaurant is showing MEDIUM SENSITIVITY to price" based on "customer willingness to pay in your area." Cost differences at nearby locations can be stark. Researchers found that a Bic Mac at a Fresno, California store cost $5.69, but the same burger cost $6.89 at another branch two miles down the road. That's a 21 percent difference.
McDonald's says that franchisees are free to set their own prices. This could be true in theory, but a handful of store owners told Reuters that the company pressures them to use the new AI tools. A corporate document reviewed by the publication shows that McDonald's tracks adherence to the platform, and notes any deviations from the algorithm's price recommendations.
Additionally, the company has begun requiring franchisees to be "constructively engaging with McDonald's approved Pricing Consultant and Tools" as part of its new business standards. This is according to an internal communication sent to franchisees. Company documents reportedly show that McDonald's sends AI pricing guidance to franchisees at least three times a year.
Store owners also described phone calls with corporate after they strayed from those recommendations. "You don't really have much of a choice anymore", said former store owner Karen King. It's worth noting that McDonald's corporate holds a lot of power over franchisees, as it can decide whether they are allowed to renew their license or open new locations. McDonald's CEO Chris Kempczinski recently told investors that "pricing non-compliance in certain cases is part of those conversations" regarding contract renewals.
The company acknowledges that using this dynamic pricing system could open up franchisees to legal hurdles, all while continuing to push the platform. The pricing portal's terms of service reportedly warns that owners "may be competitors of each other" and "it is particularly important for all Users of the Tool to understand and comply fully with antitrust and competition laws." The document also reiterates that franchisees are "always free to determine the final price," thus potentially absolving corporate from any antitrust concerns.
The document also suggests that these store owners should seek independent legal counsel. Former FCC commissioner William Kovacic told Reuters that the language in the service agreement is "an acknowledgment there's a potential problem" given recent scrutiny of pricing algorithms.
McDonald's has decried Reuters' reporting as "speculative and uninformed." The company says the pricing portal is "a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions."
The company has been using some version of this technology since at least 2019, according to Reuters. In 2023, however, CEO Kempczinski boasted to investors that it had developed proprietary tools to evaluate pricing at individual restaurants.
It wasn't long before these tools caused a serious problem. They maximized for price, at the expense of all else. The platform suggested to a Connecticut franchisee that the location should charge $18 for a single Big Mac. This went viral and led to a lawsuit in which the store owner alleged that the brand tried to push him out of the franchisee system for discriminatory reasons. That case is still ongoing.
Other franchisees have alleged that some version of these tools recommended large price increases during the pandemic and even afterwards, as inflation continued to soar. There's a reason why McDonald's wants its franchisees to charge as much as possible for every single item on the menu. The company makes much of its money by taking a percentage of each store's total revenue.
The public seems to tolerate this type of thing when it comes to ride-sharing platforms, but not anywhere else. Wendy's got into some hot water in 2024 when its CEO announced plans for "dynamic pricing." This forced the company to say the comments were misconstrued and now insists it doesn't use customer data for its pricing.
The same thing happened to Instacart, which tested a platform that showed different grocery prices to different shoppers depending on a number of algorithmically-decided variables. The outcry was swift and now the company says it will also never use personal information to determine item prices. It has likewise ended its use of AI pricing tools.
Walmart recently unveiled a plan to mandate digital price labels at stores, which seems like the perfect way to institute dynamic pricing tailored to each consumer. Customers also rebelled at this notion, forcing CEO John Furner to vow to not use personal information to influence prices. "We don't set different prices based on who you are or the time of day, and we won't," he wrote. "Whether you're buying groceries or electronics on a hot afternoon or in a sudden rush for an item, it's never a reason to charge you more."
Despite pushback, some companies are still trying to get aboard the AI hype train. Yum Brands, which owns KFC and Taco Bell, has gone all-in on the technology. It's developing AI platforms for just about everything, including a dynamic drive-thru menu that changes based on the car approaching the window.
As for McDonald's, business has been declining in recent months. The stock value has plummeted by 30 percent since February. CEO Kempczinski said this is due to low-income consumer traffic "declining nearly double digits" over the past two years. In other words, nobody has any money and this is something surge pricing probably can't fix.