NEW YORK: McDonald’s is increasingly using artificial intelligence to guide menu prices across the United States and some global markets, a plan that aims to boost headquarters’ profit but risks alienating customers and attracting antitrust scrutiny.
One pricing factor supercharged by AI: an estimate of how much each store's patrons are willing to pay.
The details of how that pricing system works, its extensive use of AI, the company’s regulatory concerns and the tensions with its franchisees have not been previously reported.
Reuters reviewed screenshots of the company's pricing engine taken in August and interviewed nine sources with first-hand knowledge of the burger chain’s strategy.
Guess WordCrack the word, one row at a timeBuzzwordCreate words using the given lettersMini SudokuTiny puzzle, mighty brain teaserMini CrosswordSmall grid, big challengeWord SearchSpot as many words as you can Show More Show LessMcDonald’s pricing engine uses machine-learning algorithms to continually analyse data from millions of daily transactions across McDonald’s nearly 14,000 restaurants and generate what the company calls “the optimal price” at each location for each menu item, from Big Macs to discounted coffee for seniors.
The engine has widened existing price differences for the same product between restaurants, including from neighbourhood to neighbourhood within the same area, three franchisees told Reuters.
Screenshots of the interface franchisees use, reviewed by Reuters, show messages including: “Your restaurant is showing MEDIUM SENSITIVITY to Price” based in part on “customer willingness to pay in your area”.
The platform also contains public price information pulled from online menus of nearby restaurants of competitors, including Wendy’s and Burger King. Those chains said they do not use AI in pricing decisions.