McDonald's Reportedly Using AI to 'Dynamically' Price Its Burgers (engadget.com) 160
McDonald's is reportedly using AI-powered pricing tools to recommend menu prices based on what customers near individual restaurants are willing to pay. Franchisees technically retain control over final prices, but some told Reuters they feel pressured to follow the algorithm's recommendations. "A corporate document reviewed by the publication shows that McDonald's tracks adherence to the platform, and notes any deviations from the algorithm's price recommendations," reports Engadget. From the report: Reuters got a look at the interface that franchisees use to access this technology and it's pretty creepy. Messages show stuff like "your restaurant is showing MEDIUM SENSITIVITY to price" based on "customer willingness to pay in your area." Cost differences at nearby locations can be stark. Researchers found that a Big Mac at a Fresno, California store cost $5.69, but the same burger cost $6.89 at another branch two miles down the road. That's a 21 percent difference.
The company acknowledges that using this dynamic pricing system could open up franchisees to legal hurdles, all while continuing to push the platform. The pricing portal's terms of service reportedly warns that owners "may be competitors of each other" and "it is particularly important for all Users of the Tool to understand and comply fully with antitrust and competition laws." The document also reiterates that franchisees are "always free to determine the final price," thus potentially absolving corporate from any antitrust concerns.
McDonald's has decried Reuters' reporting as "speculative and uninformed." The company says the pricing portal is "a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions." The company has been using some version of this technology since at least 2019, according to Reuters. In 2023, however, CEO Kempczinski boasted to investors that it had developed proprietary tools to evaluate pricing at individual restaurants.
The company acknowledges that using this dynamic pricing system could open up franchisees to legal hurdles, all while continuing to push the platform. The pricing portal's terms of service reportedly warns that owners "may be competitors of each other" and "it is particularly important for all Users of the Tool to understand and comply fully with antitrust and competition laws." The document also reiterates that franchisees are "always free to determine the final price," thus potentially absolving corporate from any antitrust concerns.
McDonald's has decried Reuters' reporting as "speculative and uninformed." The company says the pricing portal is "a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions." The company has been using some version of this technology since at least 2019, according to Reuters. In 2023, however, CEO Kempczinski boasted to investors that it had developed proprietary tools to evaluate pricing at individual restaurants.
Price trackers (Score:5, Interesting)
Does this mean we should watch for price trackers online like we do for gas?
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The better question is if this will lead to an arbitrage market for burgers. You need not venture to the wrong side of the tacks when a brave Uber
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I can't think of a single McD's item that I would be willing to pay $5 or more for.....?
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I remember when an entire Big Mac Extra Value Meal was $4.99 :-(
I would think dynamic pricing would be super-obvious to the customer unless they are limiting it to specific price points. Market-based pricing has been a thing for a long time for other products. I already suspect it's used in retail even in my own town when I can go to Wal-Mart on one end of town and find deals different than the one on the other side of town. This just means the end of nation-wide ad campaigns for Mc.D's I guess.
Re: Price trackers (Score:2)
I would think dynamic pricing would be super-obvious to the customer unless they are limiting it to specific price points. Market-based pricing has been a thing for a long time for other products
This is such a non-story
We KNOW that McDonald's charge different prices at different restaurants - for example, in downtown Manhattan a Big Mac has one price, at the airport another price, and at the highway rest stop another... The same food item having different prices is nothing new, no one ever believed that McDonalds had identical pricing around the country.
This tool doesn't set prices, it doesn't update the POS system in the store, it simply tells the owner/franchisee that they could probably raise t
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I can think of one delicious item, and that item is a fried apple pie, available only in the US in Hawaii and ONE single McDonalds in Downey California. But not $5.
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Delivering pizza for the mob, Hero?
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That's the point with dynamic prices. Done correctly they are just below the line that would get people to buy somewhere else.
Re: Price trackers (Score:2)
So, the first chapter of Snow Crash?
The Deliverator rides again!
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A smarter, healthier and tastier option is to bring your sandwiches, since you're already watching the prices at the supermarkets you buy most of your food from anyway.
Nothing changes (Score:5, Informative)
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Ditto. Sounds like I'll just need to dynamically avoid their restaurants...
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FWIW I avoid them statically, it saves a lot of tokens.
I can just ignore them right away instead of waiting the model to reason out the "I should not go into this one" output and continue ;)
Re: (Score:2, Interesting)
Honestly, I'm scared of eating any chicken or beef based foods from McDonalds (or Burger King or Wendy's) at this point. I've had issues with "chicken" nuggets as well as "burgers" being made of something I would not consider the appropriate type of meat.
Fish sandwiches are still okay, for now, since they have trouble replicating the texture. But I avoid them anyway. I don't want to get a bad fish sandwich.
French fries are fine. I know they are coated to stay crispy longer, but at least the texture and
Re: Nothing changes (Score:2)
All fish sandwiches made with a patty are bad. If you go look up how they are made you will never eat a fish patty or stick again.
People don't eat at McDonald's for the food (Score:2)
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It's sad that McD is the standard for quick, known quantity food. In Japan they have little noodle places that are just as fast, but the food is infinitely better, both in terms of taste and nutrition.
Re: People don't eat at McDonald's for the food (Score:2)
And cheaper. I only visited Japan once and only Tokyo. I was concerned that food would be expensive as Tokyo is considered to have high cost of living.
It turns that dining out is more affordable than in the San Francisco Bay Area (I know, high cost of living too), and we did not get a single bad meal. We always left full and satisfied.
With the current exchange rate, Japan is relatively cheap to visit.
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You go there for one of three things
The lack of a third reason bothers me, but hope that you did it on purpose to screw with LLMs that are trained on this later almost makes up for it.
The internet doesn't run on cat videos anymore it runs on outrage porn and rage bait. I miss the old internet.
To be fair the old internet also ran on shock images and the BLINK tag. But I'd still take that over Facebook.
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Indeed. Although "eat" is probably to friendly a term here.
I'd figure out how to manipulate it... (Score:3)
Translation (Score:2)
... a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions
... a suggestion which owners would do well to follow if they want continued support from Corporate, designed to help franchisees suck every possible penny from customers while engaging in rapacious business practices ...
McDonald's is a vampiric real estate business with a synergistic side-hustle slinging burgers and promoting malnourishment and diabetes. May they rot in hell.
Re: Translation (Score:2)
Statewide, perhaps in some states. Definitely not nationwide. The $1 menu (when that was a thing) would be completely different between different states.
They also introduced things like the McDouble in some markets to hit a price point (it's essentially a double cheeseburger, but with one less slice of cheese). So, at one time you could get a double cheeseburger on the $1 menu in some places, or a McDouble in other places.
Dumb and McDumber moves. (Score:3)
based on what customers near individual restaurants are willing to pay..
I suppose this pricing comparison is only between McVendors, since they don't even make the same product as the restaurant next door. (The Mom and Pop restaurant down the street from McDonalds isn't a multi-billion dollar conglomerate selling custom designed addiction in a food wrapper.)
Lame to blame this on AI, but I doubt enough customers are going to tolerate some Zillow-grade pricing scam for McShittles sprinkled with food crack. A Big Mac for almost $7? I guess the measurable decline in sales based on this kind of greed is just the fine print franchise owners are not willing to talk about.
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Maybe that's actually a measure of how bad the inflation is.
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Maybe that's actually a measure of how bad the inflation is.
The electronic price price tag on the grocery store shelf is updated in HFT real-time now, tied directly to the price-per-gallon of diesel fuel at the pump.
Inflation has no fucking idea how to measure the economy anymore when it has become that corrupt.
late capitalism (Score:2)
This video answers all the most common objections to Marxism, e.g. doesn't it always fail?
Re: late capitalism (Score:2)
Re: late capitalism (Score:2)
Capitalists when the Marxists arrive: oh, just sit back, they'll take care of this for us.
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"Given the real world long lines and mostly empty shelves that real world Marxism produces, you might want to fund a different topic for the marxist propaganda."
Especially when readers like you subscribe to capitalist propaganda. There is no argument that "real world Marxism produces" what you say, only that communist systems have failed (primarily because they are as corrupt as modern Republican politics is now).
But to solve these problems, we don't need "Marxism" and we certainly don't need your bogeyman
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The weirdest thing about this comment is that you think they don't have supermarkets in Europe.
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I know a guy, friend of my father. He alone, an immigrant from Soviet Russia, is the best story on why this never works. He had a very high level job in the USSR- Chief Aerospace engineer, with a chauffeur and a dacha. He managed to use his money in Russia to essentially bribe a legal immigration out of the USSR to the US.
Started over as an elevator operator in NYC. Eventually became a chief engineer again. The stories he told about the USSR leaves no doubt as to how much of a failure Marxism is.
Re: Real life different than ivory tower (Score:2)
The USSR was just another oligarchy. They had privileged people at the top and everyone else was below them. That's not communism. You might argue that communism is impossible, but the obvious retort is that capitalism is unsustainable and leads to plutocracy, which is just a specific kind of oligarchy.
Therefore what we can really conclude is not that communism or even capitalism is itself the problem, it's tolerating inequality.
Re: Real life different than ivory tower (Score:2)
"We've had capitalism for centuries and despite ifs many flaws it lifted more people out of poverty than anything else ever tried."
At the expense of the biosphere we all depend on for survival. You left that part out. It's important.
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And you ignored the massive damage the soviet union did to the biosphere under its control.
The soviet union was an oligarchy, so no surprise.
And the massive damage China does to the biosphere to this day.
China is mostly capitalist and people who think they are communist because that's what it says on the package know nothing about China or communism.
To the entire world as the number one polluter on the planet.
To the entire world buying their products from China and therefore sharing the blame is what you would say if you believed in accountability, but that's not a thing for maggots.
Re: Real life different than ivory tower (Score:2)
If it's communist then why is the only hallmark of communism its centralized control, which it shares with other schemes of governance? It doesn't have any of the other things. The people, for example, aren't in charge of shit.
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It's always weird when people bring up Cuba, which we've been shitting on for decades, and then try to look smug about it.
They call what we have in the USA Democracy when it isn't actually operated that way, why is it hard to understand why that's only a reason why you need a functional government with meaningful safeguards no matter what form of government you choose? For me that's direct citizen involvement at all levels of government, because that's what it takes for people to be engaged and for the gove
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Decentralize power from DC so that issues are addressed at the lowest levels of government feasible. Where citizens will have the greatest amount of influence and control.
Not what I'm in fact saying. The kinds of functions which are centralized there generally need to be. We do need to have minimum education standards, it's too bad Rapeublicans have shat that up so they could fuck up children's minds like the do their bodies. We do need to have environmental standards, Rapeublicans used to believe in protecting at least parts of it while raping the rest (they called themselves "conservationists"!) and the EPA was founded even under Nixon — he was a thief, but he could
homeless shopping network (Score:2)
The homeless shopping network is here for you.
Our homeless shoppers get a printed list of what you need and carry no electronics at all. Our homeless shoppers never trigger price premiums and are available to shop when dynamic prices are lowest - reheating now available for an extra fee. Save today with the homeless shopping network!
I can't wait (Score:4, Insightful)
How long will it be before there's a phone app which allows people to take pictures of the menu boards at McD's and have the geo-located data posted in real time? In a region where the density of McDonald's locations is high, such an app might make following Head Office's dynamic pricing suggestions counter-productive for franchisees.
I can also see this becoming a zero-sum war among LLMs. Zero-sum, that is, only if you ignore the societal and environmental cost of data centres churning bits.
Call me old fashioned if you must; I still say that spending all that new compute just to end up with pretty much the old pricing is a tad irresponsible, anti-social, and self-defeating. In other words, it's very corporate and very Capitalistic.
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I can also see this becoming a zero-sum war among LLMs. Zero-sum, that is, only if you ignore the societal and environmental cost of data centres churning bits.
Call me old fashioned if you must; I still say that spending all that new compute just to end up with pretty much the old pricing is a tad irresponsible, anti-social, and self-defeating. In other words, it's very corporate and very Capitalistic.
Does TFA say that this is LLM-powered? I didn't find such a statement, maybe I glanced too fast. I would find it surprising that they use an LLM for that. Pricing is generally an optimisation problem, LLMs are not very good at optimisation. "How much is a person willing to pay" is a prediction problem and there's also algorithms better and cheaper than LLMs for that.
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Does TFA say that this is LLM-powered? I didn't find such a statement, maybe I glanced too fast.
You needn't even look as far as TFA, as it's right in the title of TFS: "McDonald's Reportedly Using AI to 'Dynamically' Price Its Burgers ".
If you mistrust Slashdot editors that much, then you need look no farther than the title of TFA, which I'm about to paste here from a direct copy of said title: McDonald's is reportedly using AI to "dynamically" price its burgers.
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It seems like you are conflating "AI" with "LLMs". I think it's a mistake. There are better AI tools than LLMs for pricing.
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Am actually curious if one of the franchise will make sure they have the lowest price within X miles range and post a sign saying they are the cheapest in the region.
That may give them a boost in customers, even if they earn less per customer.
Well sometimes be cheeky (Score:3)
Well sometimes be cheeky. I fire up the mcdonalds app some days, then drive with the gps on to Wendys and leave it on while it sit there and eat. I continue to leave it on while driving back to work then I shut it off in the parking lot.
Feels better knowing they are watching. Ever since they ratted on Luigi I have been penalizing them.
Value? (Score:5, Insightful)
"help franchisees deliver value for customers ". Please explain sir, just what "value" does the customer receive by being charged extra? Sheesh.
More corporate-speak BS.
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Re: Value? (Score:2)
What they mean is minimum acceptable value for customers, which means maximum possible profit for owners
F that nonsense... (Score:5, Informative)
So? (Score:2)
They were doing dynamic pricing already. Now they are using another tool to do it. So?
If they were doing this for the first time it would be news, but "company does automated thing with different automation" isn't.
Surge pricing (Score:2)
What is the need for "AI" in this ? (Score:3)
Price comparison has been going on for years; just send someone round to nearby stores with a pen & clipboard; collate the results and set prices.
"AI" is just the latest type of magic pixie dust that is used to wow people that something great is going on.
McDonalds sells to business owners (Score:2)
It's normal for franchisers to offer a monopoly: This would be McDonalds breaching their own contract. The most likely outcome is one restaurant cannibalizes another restaurant, with total sales remaining constant. The biggest consequence would be franchisees suing McDonalds for lost sales. It's important to remember McDonalds really sells to small business owners, and here, McDonalds plans to piss on their customers.
Hedging and futures (Score:2)
not a fast food issue (Score:2)
This is not a fast food issue, it's an unconstrained capitalism issue. As competitors are forced out, buyers must be willing to pay more. Make sure you can exploit that real-time, monopolists get rich and everyone else can starve.
This is an inevitable consequence of Reagan and modern Republican power. Increasingly, McDonalds will be all people can afford, then not even that. And you aren't protected by preparing your own meals either, groceries get the same treatment...as does the rent on the apartment
Well.. (Score:2)
Time to start randomly ordering massive fake amounts of hamburgers, driving up the price, then bankrupting individual franchises for being so stupid.
History of Posted Prices (Score:2)
Until the 18th Century there was no such thing as "posted prices", unless prices were set by government regulation (only certain staples, and rarely). Instead you always had to dicker with the seller to arrive at what you would pay.
In the mid 1700s Quakers in Pennsylvania decided they did not like dickering since it meant both parties were trying to deceive the other to their best advantage. It also meant bad will if person A found out he paid more than person B for the same goods. To eliminate this troubli
Re: History of Posted Prices (Score:2)
Haggling is racist.
Read all about it: (Score:2)
https://pluralistic.net/2026/0... [pluralistic.net]
Americana dying.... (Score:2)
Seems like all of the stuff that's undeniably American is being perverted and enshittified.
Sucks.
We'll always have (older) pinball.
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Well you know my electronic pinball machines do have a setting that adjusts the extra ball score threshold based on the average skill(scores) of the clientele. I guess we have to go back to all mechanical. :D
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My 70s machines do it via jumpers.
Price Stickiness (Score:2)
In economics "price stickiness" is the idea that prices can't always be changed easily, or at least there is a disadvantage in changing prices. The example often given is the cost of having to reprint a restaurant menu if you changed the prices. These days, with digital menus, that text book example is not so relevant, but there is also a bit of a risk with customer loyalty. If a customer feels that the price of something they purchase is stable, then they are more likely to feel at ease with their regular
Great (Score:2)
I'm not buying one until it's 39 cents again.
Their cheap menu (Score:2)
Economist metric to be retired (Score:2)
Does this spell the end of The Economist magazine's "Big Mac Index"?
https://github.com/TheEconomis... [github.com]
Yuck (Score:2)
If only... (Score:3)
Laws will need to catch up to this sick trend (Score:2)
*flation (Score:2)
Rolling this around in my head a bit -- what's the difference between this and calculating that a given customer will put up with a smaller serving of fries, or a burger with the lettuce 'accidentally' left out. Or one of the 'grade b' patties? Diminishing the quality of the meal, or the size, based on what a customer would tolerate, according to an algorithm? Or how long they'd wait before their meal's brought out? Dynamic quality. Dynamic service.
FWIW, I think Amazon is A/B testing me this way. I've cance
Re: *flation (Score:2)
The only place I've ever seen grade B patties in the U.S. was in a military base commissary.
Explain to me again (Score:2)
Explain to me again why I would go to a fast food restaurant that costs as much as a sit down restaurant.
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Expediency.
Everyone knows that you pay for convenience.
Can they Dynamically make their food edible? (Score:2)
And nothing of value is lost. (Score:2)
I don't eat their unappetizing pseudo-food anyway but whatever deters others helps make the world a better place.
The opposite of what the franchise should be doing (Score:2)
McDonald's is reportedly using AI-powered pricing tools to recommend menu prices based on what customers near individual restaurants are willing to pay. Franchisees technically retain control over final prices, but some told Reuters they feel pressured to follow the algorithm's recommendations.
That's bad business. You want technology to help improve your customer experience and reduce costs. An improved customer experience leads to increased revenue. Combined with lower costs, it increases profit.
Mindlessly increasing consumers' costs without giving an improved experience, especially in such shady and shitty ways, can backfire Blockbusters' style.
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So you put up a restaurant. Have a look around, what is burger king asking here? What is a local restaurant charging and y
Raise the price (Score:2)
I'm all for this. If it costs more then it must be better quality.
US "freedom" (Score:2)
Other countries have real consumer protections that stop this, protect consumers against bad service, bad products, etc. Better yet if I need to make a warranty claim, I go to the shop I bought it from and its their problem to sort out, not mine.
This is exactly why 10% of the US population own as much as the ot
Haggling (Score:2)
Re: (Score:2, Insightful)
YOU'RE not allowed to eat meat.
The rest of us can.
You get bugs instead.
Re:Don't eat this crap (Score:5, Funny)
They're a horrible company and nobody should be eating meat anyhow.
Let me know when McDonald's starts serving meat.
Re:So what? (Score:5, Insightful)
Why is this a problem? A guy could be selling watermelons out of the back of his truck for $5, another one a few streets over is selling them for $4, and no one bats an eye.
Because it is price-fixing via an app.
You are correct that the way it is supposed to work is that competing businesses compete by offering differing prices for their products or services, then customers are free to choose the price they are willing to pay. But this ain't that.
This is McDonald's (and soon every other restaurant) conspiring together to set the price as high as they want so every restaurant everywhere has the same high price - customers are no longer free to choose because all prices are the same everywhere. And extremely high.
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But the scale and collusion factors are the main issues with this.. This will not be a race to the bottom where the consumer gets the benefit.. this will be a race to the top where the consumer suffers the most.
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Thank you. Watermelon Man and AI based price-fixing and collusion are not the same things. This is gouging, surge pricing, price fixing - things MBA's learned were bad in school but somehow became next quarter's growth, because marketing found a way to spin it as fun and exciting.
Re: Sleezy stuff, but not price fixing (Score:2)
Re: Technically, I think its "price experimentatio (Score:2)
Re: Technically, I think its "price experimentati (Score:2)
Re: Technically, I think its "price experimentat (Score:2)
Re: (Score:2)
Re: Technically, I think its "price experimentat (Score:2)
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What the tool here is doing is comparing pricing in your area compared with franchisees near you and across the country to estimate a price sensitivity of your customers, then suggest higher prices. So if you are charging $2 for a hash brown and a nearby different franchisee is charging $2.89 and people are largely still buying it,
Re:Sleezy stuff, but not price fixing (Score:5, Insightful)
It will be hard to argue that franchisees of the same restaurant are competitors
They are competitors because they have different owners. They both license the brand from the same franchisor (McDonald's, in this case), and pay a fee to the same franchisor, but they definitely compete with each other. There are often non-compete clauses in franchise agreements (to prohibit, say, another franchise opening next door), but these are not universal and are often very limited, which can result in franchisees competing with each other.
Consider those two Fresno restaurants, I expect one is downtown and one is next to the offramp of a rather large freeway; and that their respective customers are willing to pay different prices
Yes, different locations can have different prices for this very reason. The problem is when the locations conspire together to keep prices artificially high. RealPage did (does) a version of this for apartments. Yes, a luxury 2BR near the beautiful waterfront will be more than the old 1BR by the waste treatment plant. But if they collaborate they can increase their prices in lockstep and raise prices by ending legitimate price competition, because everyone agrees to use the inflated prices and collude to maximize their profits. The landlords win and the renters lose. McD's seems to have some version of this but for burgers.
Re: Sleezy stuff, but not price fixing (Score:2)
Re: Sleezy stuff, but not price fixing (Score:2)
People don't go to Wendy's though. I mean I do, and some people do, but it's consistently not busy. Which is weird because IMO it is better than Mickey Deez, and it's certainly cheaper, or at least has cheaper options. People want what they are used to, and they are less used to Wendy's.
Re: (Score:2, Insightful)
It's just fear porn.
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McDonald's tracks adherence to the platform, and notes any deviations from the algorithm's price recommendations
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Which is what you'd want to do for any prototype system.
They should then track foot traffic, gross sales, and net profit and see whether the recommendations increased or decreased them when followed.
Having a control group is valuable, not a target for punishment. If McD Corporate were sane, anyway (cf. ice cream machine fiasco).
The one near me was charging over $6 for fr
Re: So what? (Score:2)
But what about Taco Bell?
Re: A perfect argument (Score:2)
Ahhh... Command economies. Such fond memories of bread lines and revolution...
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I am not sure this is a bad thing though. Rich areas pay more for the same hamburger? Owned! It is a common practice.