McDonald's Sued Over AI Tool Accused of Setting Franchise Prices
A federal lawsuit claims McDonald's AI pricing platform lets supposedly independent franchises coordinate prices, pushing up what customers pay.
What happened: A proposed nationwide class-action lawsuit filed October 2 in federal court in Chicago accuses McDonald's of using an AI tool to effectively coordinate prices across its independently owned US franchises. The suit, brought by Illinois customer Michael Thomas after he noticed his usual order cost different amounts nearby, argues this amounts to franchises illegally sharing nonpublic sales data through McDonald's software. McDonald's says the lawsuit is inaccurate and insists franchisees, not AI, set menu prices, calling its tools optional aids rather than price-fixing mechanisms.
Why it matters: US antitrust law requires competing businesses to price independently; sharing sales data to inform pricing can count as illegal coordination even without an explicit agreement. If a court agrees the AI tool crosses that line, it could reshape how any franchise chain or industry uses shared data platforms to guide pricing. Consumers interviewed described real, sometimes large, price gaps for identical orders between neighborhoods just a few miles apart, feeding frustration during a period when many Americans already feel squeezed by rising costs.
How it works, plainly: McDonald's built a pricing platform using Dynamic Yield, an AI company it bought in 2019, which draws on data from millions of daily transactions to generate price recommendations for thousands of restaurants. Franchisees can reportedly see suggested prices for their location and are, according to a Reuters investigation, sometimes asked to log when and why they deviate from those suggestions. McDonald's disputes that characterization and says the tool does not automate, coordinate, or fix prices, calling it a resource franchisees can accept or ignore.
The rollout: This isn't McDonald's first brush with this issue: a Connecticut franchise owner previously sued after the same tool allegedly suggested the $18 Big Mac meal that went viral in 2023. The company issued a statement on October 1, a day before this suit was filed, denying it uses dynamic pricing. Meanwhile at least 90 bills have been introduced across US states this year targeting algorithmic price-setting, suggesting this case lands amid growing political appetite to regulate AI-driven pricing regardless of its outcome.