McDonald's is using machine learning to guide menu prices across its nearly 14,000 US restaurants and some international markets, a Reuters investigation published Tuesday reveals — a system that estimates how much customers at each location are willing to pay and has widened price gaps between neighborhoods, drawing franchisee frustration and potential antitrust scrutiny.
The details, based on screenshots of the company's pricing engine reviewed by Reuters and interviews with nine sources with first-hand knowledge of the burger chain's strategy, offer the clearest look yet at how AI pricing is spreading through the fast-food industry — and at the breaking AI news that regulators are watching it closely.
How the Pricing Engine Works
McDonald's pricing engine uses machine-learning algorithms to continually analyze data from millions of daily transactions and generate what the company calls "the optimal price" at each location for each menu item — from Big Macs to discounted senior coffee. The system also pulls public price information from the online menus of nearby competitors, including Wendy's and Burger King. Both chains told Reuters they do not use AI in their pricing decisions.
Screenshots of the franchisee interface show messages such as "Your restaurant is showing medium sensitivity to price," based in part on "customer willingness to pay in your area." Three franchisees told Reuters the engine has widened existing price differences for the same product between restaurants, including from neighborhood to neighborhood within the same area.
A Reuters check of prices on the McDonald's mobile app in September found concrete examples: a company-run store in Fresno, California sells a Big Mac for $5.69, while another company-run restaurant two miles away charges $6.89 — a 21% premium for the identical sandwich. Reuters could not confirm whether the difference resulted from the engine's recommendations or other factors.
Franchisees Feel Pressured
McDonald's says its franchisees are free to set their own prices, describing the pricing portal as "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 called Reuters' reporting "speculative and uninformed" claims that "attempt to recast a standard business practice as something controversial."
But five store owners told Reuters the company pressured them to adopt the AI pricing tools. An internal communication reviewed by Reuters shows that in January, McDonald's began requiring franchisees to be "constructively engaging with McDonald's approved Pricing Consultant and Tools" as part of its new business standards. A June document reviewed by the news agency shows the company records franchisees' deviations from the engine's recommendations in detail.
The friction is also financial. McDonald's headquarters makes the vast majority of its money from a percentage of franchisees' total revenue, regardless of individual-store profit margins — so pushing lower prices to lift customer traffic can boost the corporation's bottom line even when it squeezes a franchisee's margin. Franchisees, by contrast, have stronger incentives to raise prices to cover rising wages and rent. In recent months, the engine has pushed more conservative pricing, including some decreases, which franchisees say has caused friction with headquarters.
At an investor meeting on Wednesday, McDonald's described its "industry-leading" pricing engine as central to a broader corporate bet on affordability, saying franchisees recognize the need for inexpensive menu items to lure low-income consumers.
The Regulatory Shadow
AI-driven pricing is drawing increasing attention from US courts and regulators, who are scrutinizing whether algorithmic pricing practices can facilitate illegal coordination between competitors — a category franchisees can sometimes fall under, since restaurant owners selling the same brand in the same market may be legally considered rivals.
Notably, the legal terms for McDonald's own pricing portal — reviewed by Reuters in August — caution franchisees that using the engine carries antitrust risk precisely because its restaurant owners "may be competitors."
The industry's recent history shows how quickly consumers rebel. Wendy's faced a wave of criticism in 2024 after its CEO announced plans to test "dynamic pricing"; the company said its comments were misconstrued and told Reuters it never implemented such a system. Instacart in December ended a limited test of AI tools that showed different grocery prices to different shoppers after a study disclosing the practice sparked criticism from consumers and lawmakers, and pledged never to use personal information to determine item prices.
The $18 Big Mac Precedent
The scrutiny also evokes 2023, when McDonald's proprietary pricing tools suggested that a Connecticut franchisee charge about $18 for a Big Mac meal sold off a state turnpike, according to a lawsuit in which the franchisee, George Michell, alleged the company tried to push him out of the system. The price went viral and sparked widespread consumer outrage, though a filing from the franchisee said it "caused no loss of sales." McDonald's has disputed the lawsuit; courts have dismissed claims related to breach of contract, and the case is ongoing.
McDonald's has used some form of AI pricing tool since at least 2019, and the practice is spreading: Yum Brands, the world's largest restaurant company by location count and the owner of KFC and Taco Bell, is also turning to AI to help with pricing and other operations, though it did not respond to Reuters' request for comment.
What It Means for Customers
For diners, the shift means the price of a Big Mac increasingly depends on what an algorithm infers about their neighborhood — its demand, its competitors, and its tolerance for higher prices. "It's in the interest of the company to know where there's (customer) demand and to get that feedback in real time," Brooklyn resident Diane Bezucha told Reuters. But if the technology is used to raise prices simply because demand exists, "that doesn't really help me as a customer."
As algorithmic pricing spreads through retail and restaurants, expect lawmakers to keep asking where personalized optimization ends and price discrimination begins.
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