McDonald's is reportedly using AI-powered pricing tools to recommend menu prices based on what customers near individual restaurants are willing to pay. Franchisees technically retain control over final prices, but some told Reuters they feel pressured to follow the algorithm's recommendations. "A corporate document reviewed by the publication shows that McDonald's tracks adherence to the platform, and notes any deviations from the algorithm's price recommendations," reports Engadget. From the report: Reuters got a look at the interface that franchisees use to access this technology and it's pretty creepy. Messages show stuff like "your restaurant is showing MEDIUM SENSITIVITY to price" based on "customer willingness to pay in your area." Cost differences at nearby locations can be stark. Researchers found that a Bic Mac at a Fresno, California store cost $5.69, but the same burger cost $6.89 at another branch two miles down the road. That's a 21 percent difference.
The company acknowledges that using this dynamic pricing system could open up franchisees to legal hurdles, all while continuing to push the platform. The pricing portal's terms of service reportedly warns that owners "may be competitors of each other" and "it is particularly important for all Users of the Tool to understand and comply fully with antitrust and competition laws." The document also reiterates that franchisees are "always free to determine the final price," thus potentially absolving corporate from any antitrust concerns.
McDonald's has decried Reuters' reporting as "speculative and uninformed." The company says the pricing portal is "a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions." The company has been using some version of this technology since at least 2019, according to Reuters. In 2023, however, CEO Kempczinski boasted to investors that it had developed proprietary tools to evaluate pricing at individual restaurants.
Read more of this story at Slashdot.
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