McDonald's is facing a proposed nationwide class-action lawsuit in a US federal court, accusing the fast-food giant of using an AI-powered system to coordinate menu prices across its vast network of restaurants and franchises. The lawsuit, filed in Chicago, alleges that McDonald's violated US antitrust law by conspiring with its independent franchisees to fix prices through algorithms trained on nonpublic data.
Antitrust Allegations and Company Denial
The core of the complaint centers on the principle that independent businesses, such as McDonald's franchisees, must set their prices autonomously. The plaintiffs contend that McDonald's leveraged its extensive data and franchised system to manipulate consumer prices. This legal action follows a Reuters report detailing how McDonald's pricing engine continuously analyzes data from millions of daily transactions across its nearly 14,000 US restaurants using machine-learning algorithms.
In response, McDonald's has issued a statement calling the allegations "speculative and uninformed." The company asserts that AI does not dictate the price of any menu item, emphasizing that franchisees retain full autonomy over their pricing decisions. McDonald's also highlighted that the use of pricing recommendation tools and analytics is a common practice across various industries.
Broader Trend of Algorithmic Pricing Lawsuits
This lawsuit against McDonald's is part of a growing trend of class actions in recent years where plaintiffs allege that companies have used algorithms or AI to illegally coordinate prices for various goods and services, including hotel rooms and apartment rentals.
Lark Turner, a lawyer representing the plaintiff, stated 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 lawsuit seeks to represent potentially millions of McDonald's customers nationwide.
McDonald's Franchise Model and Technology Expansion
With over 46,000 locations globally, approximately 95% of McDonald's restaurants are owned and operated by independent local business owners, making franchisees a crucial component of its business model. The company has also been actively expanding its use of technology, including its NEXT strategy, which incorporates generative AI-enabled ArchIQ technology. This system, intended to improve restaurant efficiency, is being rolled out across its US and International Operated Markets.