McDonald’s is facing a proposed nationwide class-action lawsuit in the United States alleging that its AI-powered pricing system helped coordinate menu prices across independently operated franchises and company-owned restaurants, raising questions about the use of algorithms in pricing.
The lawsuit was filed on October 2 in the US District Court for the Northern District of Illinois by Illinois resident Michael Thomas. It alleges that McDonald’s violated US antitrust law by using machine-learning algorithms trained on nonpublic restaurant data to generate pricing recommendations across its network.
According to the complaint, McDonald’s has operated a centralised machine-learning pricing engine since at least 2019. The system allegedly pools transaction and sales information from restaurants and uses the data to recommend prices for menu items including Big Macs and Quarter Pounders.
The lawsuit argues that restaurants that would otherwise make independent pricing decisions could receive recommendations generated from a common pool of confidential information, potentially reducing competition between locations.
McDonald’s has rejected the allegations, calling them “speculative and uninformed.” The company maintains that artificial intelligence does not set or change the price of any menu item and that franchisees independently decide what customers pay.
The fast-food company has also denied using dynamic pricing. It said its pricing recommendation tool considers restaurant-level market conditions, while franchisees can choose whether to follow the recommendations. Factors traditionally considered in pricing decisions can include local operating costs, customer demand, competition and economic conditions.
The legal action follows scrutiny of McDonald’s use of technology to guide pricing across its US restaurant network. Its pricing engine reportedly analyses data from millions of daily transactions across nearly 14,000 restaurants.
The complaint seeks to represent potentially millions of McDonald’s customers who may have purchased products at prices allegedly influenced by the system. The court has not ruled on the allegations, and the proposed class has not yet been certified.
The dispute adds McDonald’s to a broader debate around algorithmic pricing and competition. Similar legal challenges in the US have examined the use of algorithms in sectors including hotels and residential rentals, particularly when pricing systems draw information from businesses that otherwise compete with one another.
For McDonald’s, the case centres on whether its system functions solely as an analytical tool providing optional recommendations or whether the use of shared data and centrally generated recommendations can amount to unlawful coordination. That question will now be tested through the legal process.
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