Dive Brief:
- McDonald’s has disputed claims that it uses artificial intelligence to determine menu prices and said that it doesn’t use dynamic pricing, per a press release posted last week.
- The fast food chain said it provides franchisees with “tools, resources, research and recommendations to help them make informed decisions” on pricing.
- The response comes after Reuters and other media outlets reported that McDonald’s was using AI to estimate how much a customer was willing to pay for menu items based on data from millions of daily transactions across 14,000 locations.
Dive Insight:
McDonald’s franchisees have long set the prices of menu items, and many operators base pricing on market trends. This practice results in pricing differences at McDonald’s restaurants across the U.S. For example, the chain’s Big Arch Burger limited-time offer ranged from $8 to $9 depending on location.
“Businesses have long considered factors such as local costs, customer demand, competition and economic conditions when making pricing decisions,” McDonald’s said. “Pricing recommendation tools and analytics have been used across industries for decades to help businesses make more informed decisions.”
The company currently uses digital menu boards to highlight different LTOs, show when an item is out of stock and display different items depending on the day, per Restaurant Dive observations of a location in Ashburn, Virginia.
However, the fast food chain vehemently denied the use of AI to set or change menu pricing, saying that McDonald’s pricing recommendations “provides restaurant-specific recommendations” and doesn’t “change prices in real-time or at different hours during the day.”
The chain also reiterated that its value standards are meant to ensure that franchisees are "delivering the experience and value and customers expect from McDonald’s.” For example, the chain began an evaluation of franchisee’s pricing decisions at the beginning of the year to ensure that operators were consistently offering “reliable value” across the customer experience.
In September, McDonald’s rolled out extensive strategies under its Next strategy, which includes an $8.5 billion investment to provide partner support through 2036 to accelerate restaurant modernization, operational improvements and technology deployment. It also debuted ArchIQ, an AI-powered restaurant operating system. Executives said that tool would enable drive-thru voice AI, automated inventory tracking and connected equipment with computer vision to ensure order accuracy. The technology is meant to reduce complexity and allow crew members to focus on offering better hospitality to guests.
This isn’t the first time that a restaurant chain has come under fire over pricing decisions. In 2024, Wendy’s backtracked on plans to test dynamic pricing after considerable consumer backlash. The company said digital menu boards would give it more flexibility to change featured items and it wasn’t intended to be used to increase prices during high-demand periods
