McDonald's uses AI for dynamic pricing, varying burger costs by location

AI-Driven Dynamic Pricing Implemented

McDonald's has implemented artificial intelligence to dynamically price its menu items in the US and certain global markets. This system aims to determine an "optimal price" by estimating what customers at a specific store location are willing to pay for items.

Price Variations and Customer Sensitivity

The AI-driven pricing results in varying costs for the same items across different locations, even within the same city. An interface reviewed by Reuters indicates "customer willingness to pay in your area" and assigns a "sensitivity to price" rating to each restaurant. For example, a Big Mac was found to cost $5.69 at one Fresno, California store and $6.89 at another two miles away, representing a 21 percent difference.

Franchisee Pressure and Compliance

While McDonald's states franchisees can set their own prices, some store owners report corporate pressure to use the AI tools. Internal documents show McDonald's tracks franchisee adherence to the pricing platform and notes deviations from algorithm recommendations. The company has also begun requiring franchisees to engage with "McDonald's approved Pricing Consultant and Tools" as part of new business standards, and corporate communications indicate AI pricing guidance is sent at least three times annually. Former store owners have described calls from corporate after not following recommendations, and CEO Chris Kempczinski stated that "pricing non-compliance" is part of contract renewal discussions.