McDonald's faces federal lawsuit over AI pricing tool

Average menu item price rose about 40% from 2019 to 2024

A federal lawsuit filed in Chicago on October 2 accuses McDonald’s of deploying an AI pricing tool that allegedly allows independently owned franchises to exchange nonpublic price and sales data, which prosecutors say violates antitrust laws and has unfairly inflated menu prices for Americans. The suit, proposed as a nationwide class action, was brought by an Illinois man who said he noticed wide price variation for the same order at McDonald’s locations near his home.

The complaint identifies the plaintiff as Michael Thomas, a DeKalb, Illinois, resident described in the filing as “price conscious.” Thomas noticed that the cost of his usual order — a Quarter Pounder with cheese, fries and a Coke — varied even between locations in his neighborhood, according to the lawsuit. The attorney listed as representing Thomas did not immediately respond to a request for comment.

The vast majority of McDonald’s U.S. stores are independently owned and are said to individually decide on prices under company policy. Antitrust law requires businesses to set prices independently from their competitors, because coordinating prices can stifle competition and push up costs for consumers. The lawsuit argues that the AI tool functions as a channel for franchise locations to share nonpublic price and sales data.

“This case is about McDonald’s bringing ‘optimization’ to America’s largest fast food chain,” the complaint states. It adds: “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 US restaurants. The result is algorithmic price-fixing aimed at customers who are already stretched thin.”

McDonald’s denied the allegations. A spokesperson for the corporation said the “complaint is filled with inaccuracies and we will vigorously defend against this lawsuit.” The spokesperson added: “AI does not set menu prices at McDonald’s restaurants – McDonald’s franchisees do. 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.”

The company has separately pushed back against a recent Reuters investigation that reported some McDonald’s franchise owners have been pressured to use the AI pricing tools and to record their deviations from the tool’s recommendations. McDonald’s called that reporting “speculative and uninformed.”

The pricing variation alleged in the lawsuit is reflected in customer experiences. In Manhattan’s financial district, Chukwama Okeke, 43, said he paid about $15 for a mango-pineapple smoothie value meal — an order he can only afford about once a month. At a McDonald’s in Brooklyn’s Crown Heights neighborhood, he said, the same meal costs closer to $9. “McDonald’s in Manhattan is much more expensive than those in Brooklyn,” Okeke said. “I’ve notice in some areas if they have a lot of like foot traffic, the prices tend to get higher.”

Beatriz Milander, 27, who ordered a snack wrap, small fries and an iced coffee for $11.51 in the financial district, said she had not noticed a dramatic gap between Manhattan and her Bronx neighborhood but observed that overall prices had edged upward. “In the last few months, I’ve seen them do more deals or like lower-priced things,” she said. “But it definitely was pricing up for a little bit there.”

McDonald’s prices have drawn public scrutiny in recent years. According to a 2024 fact sheet the company published, the average price of a McDonald’s menu item increased about 40% between 2019 and 2024. The chain went viral in 2023 over an $18 Big Mac meal at a Connecticut location; the franchise owner there filed a lawsuit alleging that the AI pricing tool had suggested the $18 price.

McDonald’s acquired AI company Dynamic Yield in 2019. In a statement released on October 1, the day before the lawsuit was filed, McDonald’s denied using dynamic pricing and described its pricing tool as providing information that franchises are free to adopt or reject.

Experts say that companies using AI to set or alter pricing could exacerbate the country’s affordability crisis and make it harder for Americans to bear everyday costs. So far this year, at least 90 pieces of legislation have been filed across the country to push back against algorithmic price-fixing, according to Lindsay Owens, the head of the left-leaning think tank Groundwork Collaborative, who recently authored a book on the topic.