US lawmakers, in letter, question McDonald’s CEO about algorithmic pricing practices

On November 2, a group of five US lawmakers wrote to McDonald's CEO Chris Kempczinski regarding the company's use of algorithmic pricing tools. The lawmakers, including Senator Elizabeth Warren and four Democratic Representatives, shared the letter with Reuters. The letter raised concerns that McDonald's might be using AI to increase consumer prices and potentially facilitate collusion among franchisees.

The lawmakers questioned Kempczinski about whether the pricing tools utilize individual consumer data from McDonald's loyalty program, how franchisees are encouraged to use the tools, and the extent of antitrust review before the tools were implemented. They requested a response by November 16.

McDonald's did not respond to Reuters' request for comment on the letter. In a statement following the initial Reuters reporting, the company clarified that its pricing tools do not rely on individual customer data and that franchisees have the freedom to set their own prices. McDonald's claimed its pricing tools are not mandatory and called the Reuters reporting "speculative and uninformed."

Three franchisees reportedly told Reuters that the pricing engine's recommendations have led to wider price disparities between nearby restaurants. Two consumer class action lawsuits have been filed alleging that the company illegally coordinates menu prices across franchisees and company-owned restaurants using a centralized algorithmic pricing system. McDonald's maintains that AI does not set the price of any menu item and that the use of pricing recommendation tools is widespread.