A customer claims McDonald’s pricing software may encourage similar price increases across restaurants.
A federal case filed in Chicago accuses McDonald’s of using an AI pricing system to help coordinate menu price increases across its restaurants, raising questions about how the fast-food chain sets prices for millions of customers. Michael Thomas, an Illinois resident who regularly visits the restaurant, filed the complaint in federal court on Friday, October 16. The filing claims the company worked with its franchise owners to use computer-based pricing tools in ways that could lead to higher prices for customers. The complaint also argues that the system could help restaurants follow similar pricing patterns rather than make independent decisions about what to charge.
The filing came shortly after it was reported that McDonald’s had been pushing franchise owners to use artificial intelligence tools when setting menu prices. The report drew attention to the role of computer systems in decisions that affect the cost of popular items, including burgers, fries and other familiar menu choices. According to the complaint, McDonald’s uses a machine-learning system that reviews sales information from competing restaurants and other records to suggest prices for individual locations. The system is operated by Tiger Analytics and reportedly examines sales records from the company’s nearly 14,000 U.S. restaurants before recommending what each location should charge.
The filing claims the tool can estimate how much customers in a particular area may be willing to pay for menu items. It also alleges that the system assesses how strongly customers may react to price changes by comparing information gathered from other McDonald’s locations.
A central part of the complaint concerns rules that allegedly connect pricing decisions at different restaurants. The plaintiff claims the AI pricing system links one location’s price increases to whether other McDonald’s restaurants have already raised prices on the same item. If accurate, the allegations could raise questions about whether franchise owners are making separate pricing choices or following a system that encourages similar increases across locations. Lark Turner, an attorney representing Thomas, said the company was using its large amount of sales information and franchise network to extract additional money from customers. Turner described the practice as an effort to charge customers more, down to the last French fry. McDonald’s has rejected the claims and said it intends to fight the case. In a statement to the Daily Caller News Foundation, the company disputed the complaint’s account of how its pricing system works.
The company said artificial intelligence does not set menu prices at its restaurants. Instead, McDonald’s said individual franchise owners remain responsible for deciding what customers pay. The company also said it provides optional tools that franchisees can use to make decisions about their businesses and customers. According to McDonald’s, those tools do not automatically set prices, coordinate decisions between restaurants or establish fixed prices across the chain. The company’s response directly challenges the complaint’s claim that the technology could be used to coordinate price increases.
The case also draws attention to comments made by McDonald’s Chief Executive Officer Chris Kempczinski during an earnings call on August 4. Kempczinski said the company sometimes increases pricing with franchise owners who do not follow its recommendations. The comments may become relevant as the case examines how much influence McDonald’s has over the pricing decisions made by independently operated locations. Now Thomas’ case case will need to establish whether the pricing tools cross the line between offering business advice and encouraging conduct that violates federal competition rules.
Sources:
Lawsuit accuses McDonald’s of AI scheme to nickel-and-dime customers ‘down to the last French fry’
McDonald’s Faces Federal Class Action Over AI-Powered Menu Pricing
Join the conversation!