The McDonald's chain in the US uses AI to recommend prices to individual restaurants
The McDonald's chain in the US uses a machine learning system that recommends prices based on transactions, local willingness to pay, and competitors' prices. According to the company, franchisees decide; the algorithm's influence on specific price differences has not been proven.
The McDonald's chain in the United States uses a machine learning-based system to recommend prices to individual restaurants. According to findings by the Reuters agency, the system analyzes millions of daily transactions from nearly 14 thousand US restaurants. It also takes into account estimated customer willingness to pay in a given area as well as publicly available prices of competing chains, such as Wendy's and Burger King.
In September, Reuters found that a Big Mac burger cost $5.69 at one restaurant in the city of Fresno and $6.89 at another, located approximately three kilometers away, i.e. 21 percent more. However, it could not determine whether this difference arose due to the algorithm's recommendation or other factors. Three franchisees stated that the system deepened existing price differences between restaurants.
According to McDonald's, the pricing portal only provides recommendations and the final decision remains with the franchisees. However, five restaurant operators stated that the company put pressure on them to use the pricing tools.
Why it matters
For operators of US restaurants, this represents support for pricing decisions based on transactions, local demand, and competition. According to the company, responsibility for final prices nevertheless remains with the franchisees. For customers, comparing prices at nearby locations may help save money, though the documented differences cannot be unambiguously attributed to the algorithm.
Two audiences, two different impacts
What this means
For individuals
A customer of McDonald's restaurants in the United States cannot assume the same price for the same item even at nearby locations.
For a business
Operators of McDonald's restaurants in the United States receive data-driven pricing recommendations, but according to the company, they continue to decide on final prices. At the same time, testimonies from five operators point to pressure to use these tools.
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Event sources
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