McDonald's is deploying machine-learning models to determine menu item pricing across its network of nearly 14,000 restaurants. The system, developed by Tiger Analytics, calculates an optimal price for each location by analyzing millions of daily transactions and monitoring the pricing of competitors like Wendy's and Burger King.
The platform assesses local customer price sensitivity and willingness to pay. Franchisees receive interface reports indicating their store's sensitivity level. Data shows that prices for identical items can vary significantly between nearby locations; for instance, a Big Mac in Fresno, California, was priced at $5.69 at one store and $6.89 at another.
While McDonald's maintains that franchisees set their own prices, owners report corporate pressure to follow the AI-generated recommendations. The company tracks deviations from these suggestions and requires owners to consult with approved pricing advisors. CEO Chris Kempczinski noted that pricing non-compliance is included in business reviews.
The system operates under specific corporate parameters, such as targeting items that have not seen price increases in two years and excluding certain products like ice cream from summer hikes. McDonald's describes the portal as a non-mandatory tool, emphasizing that costs naturally vary across distinct markets and that the company adheres to antitrust laws.
