McDonald’s Hit With Class Action Lawsuit. Fast Food Giant Accused of Using AI-Powered Menu Price-Fixing

McDonald's is facing a proposed nationwide class-action lawsuit accusing the fast-food giant of using an artificial intelligence-powered pricing system to coordinate menu prices across thousands of independently operated restaurants.

The lawsuit, filed earlier this month in a U.S. District Court for the Northern District of Illinois, alleges McDonald's violated federal antitrust law by conspiring with independent franchisees to fix prices using machine-learning algorithms trained on nonpublic restaurant data. Illinois customer Michael Thomas is seeking to represent potentially millions of McDonald's customers nationwide.

At the center of the case is McDonald's pricing technology, which analyzes data from millions of transactions across the chain's nearly 14,000 U.S. restaurants. The lawsuit alleges that McDonald's pools confidential sales information from independently owned franchises and company-operated locations and uses it to generate restaurant-specific price recommendations.

"Independent businesses must set their prices independently," the complaint argues. The allegations follow a Reuters investigation published September 29 that examined McDonald's expanding use of artificial intelligence to guide pricing.

The outlet went on to detail that its investigation was based on screenshots of the company's pricing engine and interviews with nine people with firsthand knowledge of the strategy. The system can recommend an "optimal" price for individual menu items at individual restaurants after analyzing factors that include local market conditions and estimates of how much a location's customers are willing to pay.

The lawsuit also alleges McDonald's has operated a centralized machine-learning pricing system since at least 2019. Thomas contends that feeding nonpublic information from otherwise independent restaurants into the same pricing system effectively allows competing businesses to coordinate rather than independently determine prices.

Law360 reported that the complaint claims average McDonald's menu prices rose by roughly 40% over five years, though that figure is an allegation in the lawsuit and has not been established by a court.

McDonald's is strongly disputing the allegations. "AI does not set the price of a Big Mac or any other menu item," the company said in response to the lawsuit, calling the claims "speculative and uninformed." McDonald's maintains that individual franchisees decide what customers pay and that pricing analytics and recommendation tools are common across many industries.

The company separately published a detailed response to reports about its technology, saying its pricing tool only provides restaurant-specific recommendations and cannot automatically set or change menu prices. McDonald's also denied using dynamic pricing, meaning prices do not automatically change according to the time of day or an individual customer's willingness to pay.

"Franchisees independently set menu prices at their restaurants," McDonald's said, adding that operators are not required to accept its recommendations. The dispute could have implications far beyond Big Macs and Quarter Pounders.