McDonald’s is facing legal scrutiny over its use of artificial intelligence in setting menu prices, with a federal lawsuit alleging the company may have coordinated price increases across its U.S. restaurants. The complaint, filed on October 16 in Chicago by Illinois resident Michael Thomas, accuses the fast-food giant of leveraging an AI pricing system to encourage similar price hikes at franchise locations, potentially violating federal competition laws. The filing asserts that McDonald’s worked with franchise owners to deploy computer-based pricing tools that could lead to higher prices and reduce independent decision-making by operators.
Legal Allegations Against McDonald’s
The lawsuit centers on the company’s collaboration with data analytics firm Tiger Analytics to operate a machine-learning system that analyzes sales data from its nearly 14,000 U.S. restaurants. According to the complaint, the tool examines competitor pricing and internal records to suggest prices for individual locations. It also allegedly estimates customer willingness to pay in specific areas and gauges reactions to price changes by comparing data across McDonald’s own restaurants. A key allegation is that the system links price increases at one location to whether other McDonald’s restaurants have already raised prices on the same menu item, potentially coordinating increases across the chain rather than allowing franchisees to set prices independently. Lark Turner, the attorney representing Thomas, claims the company uses its vast sales data and franchise network to extract additional revenue from customers, describing the practice as charging “down to the last French fry.”
The complaint highlights recent reports that the company encouraged franchise owners to adopt AI tools for pricing decisions, drawing attention to the role of technology in setting prices for staples like burgers, fries, and other menu items. If the allegations are accurate, they could raise serious questions about whether franchise operators are truly making autonomous pricing choices or following a pre-determined algorithmic strategy. The case also references comments from McDonald’s CEO Chris Kempczinski during an August 4 earnings call, in which he stated that the company sometimes raises prices with franchisees who do not follow its recommendations. These remarks may play a significant role in determining the extent of the company’s influence over independently operated locations.
McDonald’s Response and Context
The company has rejected the claims, stating in a statement that artificial intelligence does not set menu prices at its restaurants and that individual franchise owners remain responsible for pricing decisions. The company emphasized that it provides optional tools for franchisees to make business decisions, but these do not automatically set prices, coordinate between restaurants, or enforce fixed prices across the chain. This directly challenges the complaint’s assertion that the technology could facilitate coordinated price increases. The company maintains that the tools are designed to support, not dictate, pricing strategies, and that franchisees retain full autonomy in their operations.
The lawsuit now faces the task of proving whether the AI pricing system crosses the line between offering business advice and facilitating anti-competitive behavior under federal law. Similar cases in other industries have raised concerns about algorithmic collusion, where automated systems could inadvertently or intentionally enable companies to align pricing without explicit agreements. The outcome could set a precedent for how AI tools are regulated in franchise-based businesses and highlight the growing scrutiny of technology’s role in consumer pricing.
