McDonald's is using AI to help stores price burgers: Two locations in the same city can have a 21% difference in the price of a Big Mac.

Beating AI News Flash: McDonald's is now letting AI help its stores price burgers.

A Reuters investigation found that its "pricing engine" continuously analyzes millions of transactions each day across nearly 14,000 U.S. stores, and also references publicly available prices from nearby competitors such as Wendy's and Burger King to estimate how much local customers are "willing to pay," then generates an "optimal price" recommendation for every item at every store. The system has also been used in some overseas markets.

AI recommendations further widen the price gaps that already exist among stores. Reuters found in Fresno, California, that at two McDonald's about 3.2 kilometers apart, the same Big Mac was sold for $5.69 and $6.89 respectively, a difference of 21%. However, Reuters could not confirm whether this price gap was directly caused by AI recommendations.

This system does not change prices in real time based on live demand like Uber. The AI continuously analyzes sales and competitor data, then periodically provides price recommendations to each store, with the final price still decided by franchisees. The recommendations are not necessarily price increases; in recent months, some items have instead been recommended for price cuts.

McDonald's says this tool is only for reference, but five franchisees told Reuters that the company keeps detailed records of whether they deviate from the recommended prices. Starting this year, franchisees have also been required to "actively cooperate" with pricing consultants and tools recognized by McDonald's, a requirement that has been incorporated into new business standards.