McDonald’s has been sued in a proposed nationwide US class action alleging its AI-powered pricing system unlawfully coordinates menu prices among franchisees and company-owned restaurants, raising fresh antitrust questions over algorithmic pricing.
The lawsuit, filed in federal court in Chicago on Friday, alleges McDonald’s conspired with independent franchisees to fix prices using algorithms trained on non-public data. The plaintiff, an Illinois resident, is seeking to represent potentially millions of McDonald’s customers.
McDonald’s rejected the allegations in a statement on Monday, describing them as speculative and uninformed. The company said, “AI does not set the price of a Big Mac or any other menu item,” adding that franchisees make their own pricing decisions and that pricing recommendation tools and analytics are widely used across industries.
The case follows a Reuters investigation published on 29 September into McDonald’s use of machine-learning technology to develop pricing recommendations for its US restaurants. The system analyses data from millions of daily transactions across nearly 14,000 locations and can recommend prices for individual products based on factors including local purchasing behaviour.
The technology does not necessarily result in identical prices between restaurants. Reuters found that a Big Mac cost $5.69 at one McDonald’s company-operated restaurant in Fresno, California, compared with $6.89 at another location about two miles away, although it could not establish whether the pricing system caused the difference.
The plaintiffs’ case focuses on whether centralised pricing recommendations based on non-public business information can influence prices among restaurants that would otherwise be expected to compete independently. The lawsuit alleges the arrangement dates back to 2019, according to Reuters.
Lark Turner, a lawyer for the plaintiff, said McDonald’s was “leveraging its troves of data and its franchised system to nickel-and-dime consumers down to the last French fry”. The allegations have not been proven, and the filing does not establish that McDonald’s or its franchisees breached US antitrust law.
The litigation comes as algorithmic pricing faces scrutiny in other sectors, with US consumers having filed class actions alleging the use of algorithms or AI to coordinate prices for hotel rooms, apartment rentals and other purchases. The McDonald’s case could test how competition law applies when independent businesses use centralised technology and data to inform pricing decisions.
