McDonald's Uses AI to Guide Menu Pricing Based on Customer Willingness to Pay

McDonald's is using machine-learning models to guide what it charges for menu items, with one input being an estimate of how much the customers at each individual restaurant will tolerate paying, the Reuters news agency reported.

The system analyzes millions of daily transactions across nearly 14,000 restaurants and produces what the company calls an “optimal price” for every menu item at every location. Screenshots of the interface franchisees use, reviewed by the agency, include messages telling an owner their restaurant is showing “MEDIUM SENSITIVITY to price,” based partly on "customer willingness to pay in your area."

The platform also ingests competitors' published menu prices, pulled from the online listings of nearby outlets such as Wendy's and Burger King. Both chains told Reuters they do not use AI in pricing decisions.

Three franchisees said the engine has widened price gaps between restaurants selling the same product, including between neighborhoods in the same area. Reuters’ check of the McDonald's app in September found a company-run store in Fresno, California selling a Big Mac for $5.69 while another company-run restaurant two miles away charged $6.89, a 21% premium. The agency could not confirm whether the engine caused the difference.

The AI platform is run by Tiger Analytics, according to two former employees of the firm, with McDonald's supplying rules and corporate targets. Those parameters have included concentrating increases on items whose prices have not risen in two years, and keeping ice cream and soft drinks out of increases over the summer. Tiger declined to comment to Reuters.

Officially, franchisees set their own prices. Five owners said the company pressures them to follow the recommendations, and a document from June shows McDonald's records deviations in detail. From January, franchisees have been required to engage “constructively” with the company's approved pricing consultant and tools. Chief executive Chris Kempczinski reportedly told investors in August that "pricing non-compliance in certain cases” forms part of franchisee business reviews.

The legal terms of the pricing portal warn owners that they “may be competitors” of one another and should comply with antitrust law.

Similar systems have drawn consumer backlash before. Wendy's drew criticism in 2024 over reports that it intended to charge more at busy times. The company said those reports had misconstrued an earnings update about digital menuboards, which it said would let it vary menu displays and offer discounts more easily, and that it "would not raise prices when our customers are visiting us most." Instacart ended a limited test of AI tools that showed different grocery prices to different shoppers in December.