Sen. Elizabeth Warren and four other lawmakers are challenging McDonald’s use of algorithmic pricing technology, asking CEO Chris Kempczinski to explain how the system affects customers and franchisees.
In a Nov. 2 letter shared with Reuters, the lawmakers referenced a Sept. 29 Reuters investigation reporting that McDonald’s uses machine-learning algorithms to produce what it calls “optimal price” recommendations for individual menu items at each restaurant. The recommendations reportedly factor in estimates of what a location’s typical customers may be willing to pay.
“We are concerned that McDonald’s may be using AI to squeeze consumers into paying higher prices, and that its AI pricing tools may facilitate collusion between franchisees who should be operating as competitors,” the lawmakers wrote. Warren, a Massachusetts Democrat, was joined by Democratic Reps. Greg Casar of Texas, Becca Balint of Vermont, Jesus Garcia of Illinois and Mary Gay Scanlon of Pennsylvania.
The letter asks Kempczinski whether the pricing technology draws on individual customer information from McDonald’s loyalty program, how franchisees are urged to adopt the tools and what antitrust analysis was conducted before the system was introduced.
The lawmakers asked McDonald’s to respond by Nov. 16.
McDonald’s did not respond to a request for comment on the letter. After Reuters’ earlier report, the company said its pricing tools do not use data tied to individual customers when making recommendations.
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The company also said franchisees retain control over their prices and emphasized that the technology is “not a mandate.”
McDonald’s called the Reuters report “speculative and uninformed,” arguing that it portrayed a routine business practice as controversial.
In interviews with Reuters for the September report, three franchisees said the pricing engine’s recommendations had increased price differences between nearby restaurants.
Meanwhile, two consumer class-action lawsuits filed in federal court in recent weeks allege that McDonald’s unlawfully coordinates menu prices among franchisees and company-operated locations through a centralized algorithmic pricing system.
“AI does not set the price of a Big Mac or any other menu item,” McDonald’s said after the first lawsuit was filed. The company reiterated that franchisees make their own pricing decisions and said pricing recommendation tools and analytics are widely used across the industry.
