Karen King, a former McDonald’s store owner who has since retired from the franchise system, said corporate officers telephoned franchisees to discuss prices when they departed from algorithmic recommendations.
An Illinois resident has now brought a proposed nationwide class action against McDonald’s in federal court in Chicago. Filed on Friday, the case seeks to represent potentially millions of customers and alleges that the company conspired with independent franchisees to fix menu prices through algorithms trained on nonpublic data, in violation of US antitrust law.
The central allegation is that a system presented as pricing guidance became a mechanism for coordinating decisions among restaurant owners who may compete with one another. McDonald’s rejects that account. In a statement on Monday, the company called the claims “speculative and uninformed”. It said: “AI does not set the price of a Big Mac or any other menu item”, and said franchisees make their own pricing decisions.
McDonald’s has used AI-based pricing in some form since 2019.
The company’s pricing engine uses machine-learning algorithms to continually assess data from millions of daily transactions across nearly 14,000 restaurants. It produces what McDonald’s calls the ‘optimal price’ for each menu item at individual locations. The system also reviews online-menu prices at nearby chains including Wendy’s and Burger King.
McDonald’s sends franchisees AI pricing guidance at least three times a year. The result can still be sharply different prices for the same item at nearby restaurants. In Fresno, California, in September, one company-run McDonald’s sold a Big Mac for $5.69 while another company-run restaurant two miles away charged $6.89, a 21% difference.
Five store owners told Reuters that McDonald’s pressured them to use the AI pricing tools. Owners described calls from the company asking why they had moved away from the algorithm’s recommendation. McDonald’s also records deviations in detail through franchisee documents, and a franchisee’s choice to follow or depart from the recommendation might affect whether they can open further restaurants.
The company’s own pricing portal cautions users about antitrust scrutiny because restaurant owners “may be competitors”. Its terms say franchisees must “comply fully with anti-trust and competition laws”.
The case does not establish that McDonald’s executives directed franchisees to match prices across locations. That question, along with the formula used to generate an ‘optimal price’, would go to whether the plaintiffs can prove the alleged coordination.
McDonald’s works closely with Tiger Analytics, which runs the AI platform, to influence the engine’s recommendations, according to two former Tiger employees. A Connecticut franchisee, George Michell, separately filed a lawsuit alleging that the tool suggested he charge about $18 for a Big Mac meal sold off a state turnpike.
Wendy’s and Burger King said they do not use AI to make pricing decisions. For the Chicago plaintiffs, the issue is whether McDonald’s recommendations remained independent choices for franchisees or amounted to unlawful price coordination across the chain.
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