McDonald’s AI pricing engine scores what your neighborhood will tolerate for a Big Mac

McDonald's is using artificial intelligence to guide menu prices across nearly 14,000 U.S. restaurants and some global markets, scoring how much each store's patrons are willing to pay and generating what the company calls "the optimal price" for each item at each location, Reuters reports.

The exclusive, by Waylon Cunningham out of New York on Tuesday, rests on August screenshots of the company pricing portal and interviews with nine people who have first-hand knowledge of how it works. Tiger Analytics runs the platform. McDonald's sets the rules and corporate targets.

Willingness to pay is the model's guess at how much locals will accept before they stop buying. The interface tells operators things like "Your restaurant is showing MEDIUM SENSITIVITY to Price," based in part on "customer willingness to pay in your area." It also pulls public online menu prices from nearby Wendy's and Burger King. Those chains told Reuters they do not use AI in their own pricing decisions.

Three franchisees told Reuters the tools have widened existing price gaps from neighborhood to neighborhood. In Fresno, Reuters checked the McDonald's mobile app in September and found a company-run Big Mac at $5.69 versus $6.89 at another company-run store two miles away, a 21% premium. Reuters could not confirm that spread came from the engine's recommendations.

McDonald's says franchisees remain free to set their own prices. Five store owners said the company pressured them to use the AI tools anyway. A June franchisee document shows headquarters recording deviations from the recommendations in detail. In January, an internal communication reviewed by Reuters made "constructively engaging with McDonald's approved Pricing Consultant and Tools" part of new business standards.

A franchisee is the independent owner who runs the store under the brand. The brand still collects a cut of sales whether that owner follows the suggested number or fights it.

The company's public line is that costs and other factors vary by site, that the portal is "a tool, not a mandate," and that the Reuters reporting is "speculative and uninformed." The portal's own legal terms, captured in the August screenshots, warn owners they "may be competitors" and must comply with antitrust and competition laws. That is the company handing operators a pricing recommendation stack and a reminder that coordinating prices with rivals is illegal in the same interface.

Some form of AI pricing has been inside McDonald's since at least 2019. CEO Chris Kempczinski said in 2023 that proprietary tools already evaluated pricing at individual restaurants. Connecticut franchisee George Michell's lawsuit claims 2023 tools suggested about $18 for a Big Mac meal off a state turnpike. The case is ongoing. McDonald's disputes it.

The timing sits on soft traffic. Placer.ai estimates put U.S. foot traffic down year over year for every complete month since March. On the August earnings call, Kempczinski said about a third of franchisees had not complied with under-$3 menu pricing guidance, and that "pricing non-compliance in certain cases is part of" business-review conversations.

Headquarters shipped a neighborhood-level price brain, scoring sticker-shock sensitivity store by store, logging who ignores the suggestion, and writing antitrust caution into the login screen.

The independence story and the optimal-price story cannot both be the whole truth.

Sources

• Inside McDonald's push to have AI price your Big Mac – Reuters