Big Mac prices can vary even within the same neighborhood

Big Mac prices can vary even within the same neighborhood

According to Reuters, McDonald's pricing tool uses artificial intelligence algorithms. The system will continuously process data from almost 14,000. chain restaurants in the United States and determine - as the company puts it - the "optimal price" of each product in a specific restaurant.

One of the factors analyzed is the assessment of how much customers of a given restaurant are willing to pay. The platform will also use publicly available prices from competitors' online menus, including: Burger King and Wendy's.

Reuters checked prices on the McDonald's app in September. At one of the company's restaurants in Fresno, California, a Big Mac cost $5.69, while at a restaurant about two miles away it cost $6.89. This is a difference of 21%. The agency notes that it could not independently confirm whether it resulted directly from the algorithm's recommendations.

One of the most significant cases took place in 2023 in Connecticut: the system suggested to franchisee George Michell that he increase the price of a Big Mac to $18 (close to PLN 70).

Franchisees talk about pressure

McDonald's ensures that franchisees set the final prices themselves. However, five restaurant owners interviewed by Reuters say the company is putting pressure on them to use AI-based tools.

The documents obtained by the agency show that McDonald's carefully monitors cases of deviations from the recommended prices. From January, franchisees are also required to "cooperate constructively" with a network-approved advisor and pricing tools.

Former restaurant owner Karen King told Reuters that franchisees "don't have much choice anymore" when setting prices. The company did not directly comment on this statement.

Company: It's a tool, not an order

McDonald's said in a statement that restaurant operating costs and market conditions vary between locations, even if they are only a few miles apart.

The price portal - as the company emphasizes - is a "tool, not an order". It is intended to present restaurant-specific recommendations that help franchisees make informed decisions and provide customers with an attractive offer.

The network described suggestions that the system would be controversial as "speculative and uninformed."

Concerns about prices set by algorithms

Reuters reports that the pricing system has been used by McDonald's since at least 2019. During the period of high inflation, he was supposed to recommend more significant increases. Currently - according to some franchisees - it more often encourages limiting or lowering prices to attract customers with lower incomes.

Such a system is a source of tension. The headquarters earns primarily from its share in the restaurant's revenues, while the owners of the premises are directly affected by the increase in the costs of salaries, rent and operating activities. According to the National Restaurant Association, these costs have increased by 36% since 2019.