Business

McDonald’s Uses AI To Figure Out How Much You Will Pay For Its Food

McDonald’s at Pandora & Vancouver. Photo: Andy Nystrom

America’s largest burger chain is letting artificial intelligence help determine prices based on how much customers are lovin’ it.

McDonald’s is using an AI pricing engine to analyze data from millions of daily transactions across its nearly 14,000 U.S. restaurants to recommend “the optimal price” for each menu item, Reuters reported Tuesday. The tool, run by Tiger Analytics, makes the fast food behemoth one of the largest U.S. restaurant chains to lean on this technology for pricing, which means customers may pay different prices for the same food depending on which location they visit.

McDonald’s says its franchisees are free to set their own prices, but some store owners said they were pressured to adopt the AI pricing tool, according to Reuters.

“You don’t really have much of a choice [about pricing] anymore,” Karen King, a former McDonald’s store owner, told the outlet.

The platform uses AI-powered algorithms to tell franchisees how customers will respond to price changes, according to screenshots of the interface reviewed by Reuters. Interface screenshots featured messages such as “Your restaurant is showing MEDIUM SENSITIVITY to Price.”

“When we launch something like the EDAP [Every Day Affordable Price] menu … we provide recommended guidance to our franchisees. So we’re quite clear in terms of what we believe is the right pricing execution,” McDonald’s CEO Chris Kempczinski said on the company’s Aug. 4 earnings call. “As we’re now doing our business reviews with franchisees, which affects things like growth and eligibility from a franchisee standpoint, pricing and pricing non-compliance in certain cases is part of those conversations.”

Deloitte, a pricing advisor, recommended Connecticut franchisee George Michell charge roughly $18 for a Big Mac meal at his Darien Turnpike restaurant, according to his lawsuit against the company. McDonald’s usually charges around $10.19 for the combo, according to its website.

Deloitte offers AI and analytics consulting services, the company’s website states. “Explore how Deloitte can help you realize new value with AI.”

“By January 31, 2023, Deloitte had recommended to Michell that he price his Big Mac combo meal at the Darien turnpike restaurant above $18.00,” the lawsuit read in part.

That more than $18 price was “the exception,” according to a May 2024 statement from McDonald’s U.S. President Joe Erlinger.

McDonald’s and Tiger Analytics each did not immediately respond to the Daily Caller News Foundation’s requests for comment.

Yum! Brands — which owns KFC and Taco Bell and previously owned Pizza Hut — said its Byte platform lets restaurants manage menus, pricing and promotions with AI, according to the company’s July 30 second-quarter earnings release.

The company listed “our ability to successfully and securely implement technology initiatives, including utilization of artificial intelligence” among the risks that could affect its results, the release stated.

U.S. guest counts fell in Q2 of the year, even though sales rose 0.8 percent because customers spent more per order, according to McDonald’s.