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McDonald's uses AI to set “optimal price” for menu items per location
The system factors in local customer willingness to pay and competitors' menu prices, and a Reuters check found Big Mac prices ranged from $5.69 to $6.89 across two Fresno company stores, a 21% premium.
McDonald's is using machine learning models to guide what it charges for menu items at individual restaurants, Reuters reports. The platform estimates how much customers at each location will tolerate paying, then generates an “optimal price” for every menu item at nearly 14,000 restaurants based on millions of daily transactions.
Reuters says screenshots reviewed from the interface franchisees use show pricing guidance that indicates how sensitive a restaurant is to changes, including messages tied to “customer willingness to pay in your area.” The system also ingests competitors' published menu prices pulled from online listings of nearby outlets such as Wendy's and Burger King, Reuters added.
Both Wendy's and Burger King told Reuters they do not use AI in pricing decisions, according to the report. Reuters also cites franchisees who said the engine has widened price gaps between nearby restaurants selling the same product, including between neighborhoods in the same area.
In a Reuters check of the McDonald's app in September, a company-run store in Fresno, California priced a Big Mac at $5.69, while another company-run restaurant two miles away charged $6.89, a 21% premium, the outlet reported.