Huh: McDonald’s Sued Over AI Pricing

Realistically, dynamic pricing for a McDonald’s store, which are franchises, not company owned, can be done without AI, and is something that was done beforehand without AI by the main company

McDonald’s sued over AI tool that recommends prices to US franchisees

McDonald’s is facing a federal lawsuit that alleges its AI-enhanced pricing tool violates antitrust laws because it shares nonpublic data with franchisees who might be competing in the same market.

The lawsuit, which was filed Friday in Illinois, said McDonald’s pricing tool uses artificial intelligence to collect data that competing franchises wouldn’t normally share, like store-level sales. The Chicago-based burger giant has said it makes the tool available to U.S. franchisees to help them set prices at their individual restaurants.

The lawsuit also blames the pricing system for raising McDonald’s U.S. prices.

“McDonald’s has built and for years deployed its own information-sharing pricing platform, which draws on data from its millions of daily transactions to set menu prices across thousands of U.S. restaurants,” the lawsuit states. “The result is algorithmic price-fixing aimed at customers who are already stretched thin.”

Um, yeah, OK? This is what companies do, based on costs, and have always done. Why does fast food cost so much more in cities and airports? Heck, regular food. Things tend to cost more. Why so much more at hotels? I’m sure you can think of a ton of examples.

McDonald’s said Tuesday that the lawsuit is “filled with inaccuracies” and it would vigorously defend itself.

“AI does not set menu prices at McDonald’s restaurants – McDonald’s franchisees do,” the company said in a statement. “Optional tools are available to franchisees to help them make the best decisions for their businesses and customers, but these tools do not automate, coordinate or fix pricing in any way.”

It’s advice, and AI just makes it easier to come up with.

The lawsuit was filed on behalf of a consumer, Michael Thomas, of DeKalb, Illinois. According to the lawsuit, Thomas frequently visits McDonald’s and orders a Quarter Pounder with cheese, french fries and a Coke. The lawsuit said Thomas noticed price differences between McDonald’s stores near his home.

McDonald’s said it has used an AI-enhanced pricing tool for more than a decade. The program determines the optimal price for menu items based on a store’s sales, location and other factors, including competitors’ prices.

McDonald’s said that long before adopting the AI-enhanced tool, it collected data and recommended prices to its franchisees, who own and operate 95% of McDonald’s 14,000 U.S. stores.

Sounds frivolous, and just based on AI hatred.