McDonalds pushes AI tools that suggest Big Mac prices based on customer willingness to pay
McDonald’s has ramped up its use of AI to guide menu prices at restaurants across the country as it tries to boost profits – risking backlash from regulators and customers already fed up with surveillance pricing tactics.The world’s largest fast-food chain has increasingly been pushing franchisees to use an AI-powered algorithm that analyzes data across McDonald’s 14,000 restaurants to estimate “customer willingness to pay in your area,” according to a Reuters report.At a McDonald’s store in Fresno, Calif., for example, a Big Mac costs $5.69, according to the company’s mobile app.But at a location just two miles away, customers need to fork over $6.89 for the same burger. It’s unclear how much of that price difference is the result of the algorithm’s suggestions and the franchisee’s own discretion, since owners always have the final say in setting prices. Franchisees told Reuters that the algorithm has widened the gap between prices on identical items at various restaurants within the same neighborhoods. The AI platform also includes public pricing information from nearby rival chains like Wendy’s and Burger King, according to the report.
The two fast-food chains have said they do not use AI in pricing decisions.A spokesperson for McDonald’s argued the Reuters report was misleading since the AI algorithm does not set prices in real time, but only suggests prices to franchisees, who make their own decisions.“These speculative and uninformed claims attempt to recast a standard business practice as something controversial.AI does not set the price of a Big Mac or any other menu item,” the spokesperson told The Post.“The use of pricing recommendation tools and analytics is widespread across industries,” he added.
“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.”But five store owners told Reu...