McDonald’s has turned to artificial intelligence to help it with menu prices across the U.S. and some global markets.
But the decision has caused some controversy and not gone down well with all customers, who have noticed price differences occur in some restaurants within the same town.
According to a Reuters report published on Tuesday, September 29, one of the key factors involved is AI estimating how much diners in each store are willing to pay.
The fast-food giant has a pricing engine that uses algorithms to analyze data from millions of daily transactions across nearly 14,000 McDonald’s restaurants in the U.S. AI then generates what the company calls “the optimal price” for each individual restaurant and even for each menu item, everything from soft drinks to Big Macs.
For their report, Reuters reviewed screenshots of the company pricing engine taken in August and interviewed multiple sources with knowledge of the new strategy.
The McDonald’s mobile app showed a number of price differences In September during the investigation.
A company-run store in Fresno, California sells a Big Mac for $5.69, but another restaurant two miles away sells the same sandwich for $6.89, which is a 21% premium. Reuters could not confirm if the price difference is the result of the price engine’s recommendations or other factors.
But five store owners told Reuters the company had pressured them to use the AI-pricing tools.
McDonald’s said in a statement that store costs and other factors vary across the franchise, and that each restaurants can belong to distinct markets even when restaurants are close by.
They added that the pricing portal is “a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions.”
The company also described Reuters reporting as “speculative and uninformed” claims that “attempt to recast a standard business practice as something controversial.”
McDonalds, which also announced plans to change it’s look this week, is not alone in using AI in this way.
Yum Brands, the world’s largest restaurant company, which owns the KFC and Taco Bell brands, is also using the technology. They did not respond to Reuters request for comment.
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