McDonald’s uses AI to recommend prices across nearly 14,000 US restaurants

A recommendation with consequences

McDonald’s told Reuters that its pricing portal is “a tool, not a requirement.” Several franchise owners, however, said they were pressured to use the AI-generated pricing scheme.

The recommendations can create tension in both directions: customers may balk at suggested increases, while franchisees may object when the system advises them to cut prices. McDonald’s takes a share of each restaurant’s revenue, not its profit, so higher sales can benefit the corporation even when a restaurant is losing money. Reuters reported that recommendations to lower prices have recently caused friction between franchisees and company leadership.

The system is also shaped by goals McDonald’s sets and regularly shares with AI company Tiger Analytics. One such goal is to raise prices on menu items that have not become more expensive for at least two years.

More than a pricing tool

McDonald’s sends franchisees pricing recommendations at least three times a year and tracks cases of “non-compliance with pricing recommendations.” CEO Chris Kempczinski reportedly told investors that the measure is now part of franchisee evaluations.

That makes the system more consequential than a tool for estimating local willingness to pay. It can also help the corporation press franchisees to follow its pricing guidance. I think that second function deserves as much scrutiny as the algorithm’s price calculations: the recommendations are described as optional, yet the company tracks whether operators follow them.

AI-driven dynamic pricing is becoming more common in food, though companies rarely discuss it openly because of reputational risk. In December, Instacart faced public backlash after testing a dynamic-pricing tool on a small group of unsuspecting shoppers, then ended the program. An analysis found that a family could spend $1,200 more a year on Instacart groceries if the AI pricing scheme applied to it.

McDonald’s has used algorithms in other parts of its business, too. It is experimenting with AI for drive-through ordering for a second time and uses an AI system in hiring.

What remains unclear is how much room franchisees have to reject a recommendation when the company also tracks compliance. The Big Mac price gap is visible; the power behind the pricing guidance is harder for customers to see.