Lawsuit alleges McDonald's is rigging its prices based on location — and algorithm
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When the first McDonald's restaurant opened in 1940, computers as we know them didn't exist yet.
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Today, they could be the reason it's seemingly unaffordable to eat fast food.
'AI does not set the price of a Big Mac or any other menu item.'
A lawsuit filed in federal court in Chicago is alleging that higher prices at McDonald's are a result of price-fixing by way of an AI-powered algorithm.
The Chicago lawsuit claims the fast-food company illegally coordinates menu prices across franchises in the United States, using an AI pricing system that analyzes customer data on an ongoing basis.
The accusation argues that the algorithm tracks millions of daily transactions from its approximately 14,000 restaurants and generates pricing recommendations to its franchisees, the Daily Mail reported.
This would allow the prices to move in tandem or simply rise based on an AI estimation of how much customers in a specific area may be willing to pay.
"Independent businesses must set their prices independently," the lawsuit said, per Reuters.
In fact, a Reuters investigation is cited in the lawsuit, which revealed a 21% markup between two McDonald's locations just minutes away from one another.
The report said that in September, a store in Fresno, California, was selling a Big Mac for $5.69, while another location just two miles away had its Big Mac priced at $6.89.
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"AI does not set the price of a Big Mac or any other menu item," McDonald's reportedly said in response to the lawsuit.
The golden-arched restaurant also stated that franchisees make their own pricing decisions and that the use of pricing recommendations using tools or analytics is widespread throughout the fast-food industry.
The aforementioned report noted that McDonald's CEO Chris Kempczinski told investors in 2023 that the company had developed its own tools to evaluate pricing at individual restaurants. That same year, a location in Connecticut was allegedly told to charge $18 for a Big Mac meal at a location next to a state turnpike.
The franchisee has an ongoing lawsuit against the company, with McDonald's having disputed the details and saying the entrepreneur repeatedly breached franchise agreements.
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In the new lawsuit, a lawyer for the plaintiff said in a statement that McDonald's is "leveraging its troves of data and its franchised system to nickel-and-dime consumers down to the last French fry."
The plaintiff is reportedly seeking to represent millions of customers in a class-action lawsuit.
Blaze News previously reported on the spike in fast-food prices, which have steadily outpaced inflation rates in recent decades. McDonald's was one of the named culprits, but Taco Bell was identified as the biggest alleged price inflator.
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I am just an average American. My teen years were in the late 70s and I participated in all that that decade offered. Started working young, too young. Then I joined the Army before I graduated High School. I spent 25 years in, mostly in Infantry units. Since then I've worked in information technology positions all at small family owned companies. At this rate I'll never be a tech millionaire. When I was young I rode horses as much as I could. I do believe I should have been a cowboy. I'm getting in the saddle again by taking riding lessons and see where it goes.
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