McDonald’s is facing a federal class action lawsuit alleging its AI-powered pricing system illegally coordinates menu prices across independently owned franchises, violating US antitrust laws.
The lawsuit, filed Friday in Illinois on behalf of consumer Michael Thomas of DeKalb, claims McDonald’s uses artificial intelligence to collect nonpublic data — like store-level sales — that competing franchises would not normally share. The suit alleges this amounts to algorithmic price-fixing and blames the system for rising prices at McDonald’s restaurants nationwide.
“McDonald’s has built and for years deployed its own information-sharing pricing platform, which draws on data from its millions of daily transactions to set menu prices across thousands of U.S. restaurants,” the lawsuit states. “The result is algorithmic price-fixing aimed at customers who are already stretched thin”.
What McDonald’s Says
McDonald’s called the lawsuit “filled with inaccuracies” and said it would vigorously defend itself.
“AI does not set menu prices at McDonald’s restaurants – McDonald’s franchisees do,” the company said in a statement. “Optional tools are available to franchisees to help them make the best decisions for their businesses and customers, but these tools do not automate, coordinate or fix pricing in any way”.
The company said it has used an AI-enhanced pricing tool for more than a decade. The program determines the optimal price for menu items based on a store’s sales, location, and other factors, including competitors’ prices. McDonald’s noted that franchisees own and operate 95% of its 14,000 US stores and make their own pricing decisions.
The Allegations
The lawsuit relies heavily on a Reuters investigation published last week, which reported that McDonald’s pricing engine uses machine-learning algorithms to analyze millions of daily transactions across nearly 14,000 restaurants.
According to the lawsuit, the pricing portal’s legal terms warn that restaurant owners “may be competitors of each other” and that “it is particularly important for all Users of the Tool to understand and comply fully with anti-trust and competition laws”.
The lawsuit also cites reports that some franchisees have felt pressured by McDonald’s to use its approved pricing tools. Five franchisees told Reuters they experienced pressure from the company to follow the AI recommendations.
McDonald’s CEO Chris Kempczinski said in August that only 60% to 65% of US restaurants were offering the company’s proposed value menu, adding: “As you know, in our system, that’s not something that we just flip the switch on. It requires conversations with franchisees”.
The $18 Big Mac
The lawsuit comes as McDonald’s pricing has drawn scrutiny. In 2023, a Connecticut franchisee alleged that McDonald’s pricing tools had suggested charging around $18 for a Big Mac meal at a restaurant beside a state turnpike — a price that went viral and triggered widespread outrage.
Reuters found that one company-run McDonald’s in Fresno, California, was selling a Big Mac for $5.69, while another restaurant just two miles away charged $6.89 — a 21% difference for the same burger.
The Broader Context
US plaintiffs have filed a wave of class actions in recent years alleging that companies used algorithms or AI to illegally coordinate prices for hotel rooms, apartment rentals, and other purchases. At least 90 pieces of legislation have been filed across the country this year to push back against algorithmic price-fixing.
McDonald’s is not the only fast-food chain to face questions. Wendy’s sparked backlash in 2024 after its CEO discussed plans to test “dynamic pricing,” though the chain later said it did not implement the system. Instacart faced criticism after a study found its technology showed different grocery prices to different shoppers during a limited test.
The Bottom Line
McDonald’s is facing a nationwide class action lawsuit alleging its AI-powered pricing tool illegally coordinates menu prices across independent franchises. The lawsuit claims the system uses nonpublic sales data to enable algorithmic price-fixing. McDonald’s denies the allegations, saying franchisees set their own prices and the tools are optional. The case follows a Reuters investigation into the company’s pricing technology and comes amid growing scrutiny of algorithmic pricing across industries.
My Opinion
McDonald’s says AI does not set prices. Franchisees do. That may be technically true. But if every franchisee is using the same algorithm, fed by the same data, and nudged toward the same recommendations, then the result is the same as if McDonald’s set the prices itself. The only difference is plausible deniability.
The legal question is whether sharing nonpublic sales data among competitors — even through a corporate parent — constitutes price-fixing. Antitrust law says competitors cannot coordinate prices. If the algorithm does the coordinating, the law should still apply. A computer program is not a legal loophole. It is a tool. And if that tool is used to suppress competition, it is just as illegal as a room full of executives agreeing on prices.
There is a broader issue here too. Customers are already stretched thin. Grocery prices are up. Rent is up. And now the cost of a Big Mac depends on what an algorithm thinks the traffic will bear. If McDonald’s wants to charge $18 for a combo meal, it can, but it should have to compete for that price in a free market, not coordinate it through a shared pricing engine.
