McDonald’s Uses AI To Figure Out How Much You Will Pay For Its Food
America's largest burger chain is letting artificial intelligence help determine prices based on how much customers are lovin' it.
America’s largest burger chain is letting artificial intelligence help determine prices based on how much customers are lovin’ it.
McDonald’s is using an AI pricing engine to analyze data from millions of daily transactions across its nearly 14,000 U.S. restaurants to recommend “the optimal price” for each menu item, Reuters reported Tuesday. The tool, run by Tiger Analytics, makes the fast food behemoth one of the largest U.S. restaurant chains to lean on this technology for pricing, which means customers may pay different prices for the same food depending on which location they visit.
McDonald’s says its franchisees are free to set their own prices, but some store owners said they were pressured to adopt the AI pricing tool, according to Reuters.
“You don’t really have much of a choice anymore,” Karen King, a former McDonald’s store owner, told the outlet.
The platform uses AI-powered algorithms to tell franchisees how customers will respond to price changes, according to screenshots of the interface reviewed by Reuters. Interface screenshots featured messages such as “Your restaurant is showing MEDIUM SENSITIVITY to Price.”
“When we launch something like the EDAP menu … we provide recommended guidance to our franchisees. So we’re quite clear in terms of what we believe is the right pricing execution,” McDonald’s CEO Chris Kempczinski said on the company’s Aug. 4 earnings call. “As we’re now doing our Business reviews with franchisees, which affects things like growth and eligibility from a franchisee standpoint, pricing and pricing non-compliance in certain cases is part of those conversations.”