McDonald's has been using AI to decide how much you should pay for a Big Mac

McDonald's has experimented with artificial intelligence to set prices for its iconic Big Mac menu item, according to a recent report by Reuters. The fast-food giant has long employed machine learning algorithms in various aspects of its business, but the AI-driven dynamic pricing strategy has proven particularly contentious. Several store owners have explained to Reuters how McDonald's encourages or pressures them to adjust prices based on the AI system's recommendations.

The system analyzes transaction data from thousands of restaurants, alongside competitor prices, to determine how much customers are willing to pay. While McDonald's maintains that franchise owners have the choice to follow or disregard the algorithm, sources say store managers often face pressure and scrutiny for deviating from the AI's suggestions.

The pricing disparities can be significant, with one McDonald's in Fresno, California, charging up to 21% more for a Big Mac than a neighboring restaurant. The company has faced legal action from franchise owners who felt compelled to comply with the algorithm despite local market conditions. McDonald's has warned franchisees to adhere to antitrust laws, acknowledging the potential for accusations of price fixing or collusion through AI-based pricing.

Despite multiple failed attempts, McDonald's has continued to explore AI-driven customer-facing technologies, including a chatbot ordering system in 2024 and an AI-generated Christmas ad that faced significant backlash in the same year.