McDonald's Faces Lawsuit After Denying AI Price Strategy

McDonald's is currently facing a nationwide class-action lawsuit over allegations that the fast-food giant is using an AI-powered pricing system to coordinate menu prices across its U.S. restaurants. Filed in federal court in Chicago on October 2, the lawsuit claims that McDonald's violated U.S. antitrust law by conspiring with independent franchisees to fix prices using algorithms trained on nonpublic pricing data.

The plaintiff, Michael Thomas, is seeking to represent potentially millions of McDonald's customers nationwide. On October 1, McDonald's published a fact-checking statement titled "Separating Fact from Fiction: AI Does Not Set Prices at McDonald's," arguing that media outlets had misrepresented its practices. The company maintains that franchisees independently decide menu prices, and that its pricing tools merely provide recommendations based on local market conditions.

However, Reuters earlier reported that McDonald's pricing engine uses machine-learning algorithms to analyze millions of daily transactions across almost 14,000 U.S. restaurants and generate what the company calls the "optimal price" for menu items at individual locations. The lawsuit argues that the system suppressed competition because independently operated franchise restaurants should set prices independently, but instead allegedly used pricing recommendations generated by a common algorithm trained on pooled, nonpublic competitor data.

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