Two McDonald’s restaurants a few miles apart may sell the same meal at a different price.
McDonald’s says it reflects local business circumstances and choices by individual franchisees. But a new lawsuit says the company’s technology may have significantly greater effect on those prices than consumers know.
The nationwide class action suit filed in federal court in Chicago alleges that McDonald’s (MCD) used AI-powered pricing and nonpublic data to coordinate prices across independently operated restaurants, Reuters reported.
The allegation turns an ordinary transaction into a much larger question. When a consumer purchases a Big Mac, how independently was the pricing truly determined?
The solution, McDonald’s says, is that franchisees make the decision.
“AI does not set the price of a Big Mac or any other menu item,” the company said in a recent response to reporting about its pricing technology. McDonald’s says its system makes recommendations and cannot directly change restaurant prices.
For shareholders, the dispute reaches into the heart of McDonald’s business model and ecosystem. About 95% of McDonald’s restaurants globally are franchised, and a significant chunk of the company’s income comes from rent and royalties based on those locations’ sales.
So the legal dispute is about more than software. This is about the connection among McDonald’s, its franchisees, and the consumers paying at the counter.
McDonald’s pricing technology reaches millions of meals
The lawsuit follows a Reuters investigation into the technology McDonald’s uses to help franchisees determine pricing.
Reuters said the company’s technology employs machine-learning algorithms to examine millions of daily transactions at nearly 14,000 eateries throughout the United States. The program may take in local market data and other inputs to provide a restaurant-specific price suggestion.
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This information might be useful to an operator seeking to answer a classic restaurant question: How high can prices go before consumers start ordering less or going someplace else?
Given the magnitude of McDonald’s footprint, minor choices can have a huge impact. A few pennies more on a burger or fries can accumulate over millions of transactions and affect restaurant sales, franchisee profitability, and ultimately the royalties that McDonald’s earns.
The system goes too far, the complaint alleged. It said McDonald’s and its franchisees worked together to set prices using algorithms based on nonpublic information, Reuters reported. The complaint also asserted that independent restaurants should instead set prices individually.
McDonald’s denied this characterization. It said franchisees can accept or reject recommendations and that the system does not engage in real-time dynamic pricing or calculate what an individual customer might personally be willing to pay.
That difference will count.
A recommendation tool is a common business practice. A system that facilitates coordinated pricing among supposedly independent businesses, however, could raise a very different set of antitrust questions.
McDonald’s franchise model raises the stakes
Nearly every McDonald’s restaurant a customer visits is run by a franchisee rather than directly by McDonald’s.
That arrangement has been a financial boon for McDonald’s for a long time. Franchisees carry most of the day-to-day expenses of running restaurants, while the corporation collects rent, royalties, and other fees.
For the first half of 2026, McDonald’s generated about $8.4 billion in revenue from franchised restaurants, including $5.26 billion in rent and $3.1 billion in royalties.
McDonald’s describes the model as producing relatively stable and predictable revenue, largely because those cash flows depend on franchisee sales.
That makes menu pricing especially challenging. Charge too little, and restaurants may have a particularly difficult time absorbing increased labor, food prices, and rent. Push prices too much, and consumers may conclude that the value is gone.
For a family pulling into a drive-thru, that calculation is much simpler. They see the number on the menu board and decide whether dinner still fits the budget.
That consumer sensitivity has made fast-food affordability an increasingly prominent problem in recent years.
McDonald’s built the pricing system to give restaurant owners more information to work through that challenge. The complaint now questions whether the centralization of so much information caused a distinct concern.
McDonald’s says people still set the prices
McDonald’s issued an unusually detailed defense of its pricing practices on Oct. 1.
The business maintained that its technology does not adjust rates, does not employ dynamic pricing, and does not decide what a certain consumer pays. Instead, McDonald’s claims it offers franchisees restaurant-specific suggestions based on what the local market calls for.
“People make the final pricing decisions,” McDonald’s said.
McDonald’s also contends that two stores only a few miles apart may have quite different economics.
A restaurant in a transportation hub could have different labor expenses, customer traffic, and competition than one in a suburban community.
Those distinctions help explain why the same menu item at McDonald’s may not cost the same everywhere.
The case offers an alternative reading of the same technology. The complaint contends that the use of centralized, nonpublic information to develop recommendations for independent operators might serve to stymie the competition that would otherwise exist among eateries.
So far, no one has proved such charges.
The litigation is in its early stages, and no court has ruled that McDonald’s or its franchisees improperly set pricing.
McDonald’s investors now have another AI risk to watch
Lawsuits have previously been filed outside the restaurant sector over algorithmic pricing. Reuters said these suits have challenged similar techniques used to propose rates for apartments, hotel rooms, and other goods.
Now McDonald’s has taken the matter to one of America’s most well-known consumer transactions.
The immediate financial effect on stockholders is unclear. McDonald’s has not been held accountable, and a planned class action may take years to wind through the courts.
The bigger issue is how the organization uses technology to run a franchise system with thousands of independently controlled companies.
McDonald’s wants data and AI to assist those restaurants in making better judgments. Stronger sales by franchisees also boost its corporate finances, since royalties are often based on a proportion of sales.
It seems that the company needs to clarify where help ends and cooperation begins.
For consumers, the question is much simpler. The next time the price of a Big Mac increases, customers may ask who truly chose the figure on the menu board.
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