NEW YORK, Sept 29 (Reuters) - McDonald’s is increasingly using artificial intelligence to guide menu prices across the U.S. and some global markets, a plan that aims to boost headquarters’ profit but risks alienating customers and attracting antitrust scrutiny.
One pricing factor supercharged by AI: an estimate of how much each store’s patrons are willing to pay.
The details of how that pricing system works, its extensive use of AI, the company’s regulatory concerns and the tensions with its franchisees haven’t been previously reported. For this story, Reuters reviewed screenshots of the company pricing engine taken in August and interviewed nine sources with first-hand knowledge of the burger chain’s strategy.
McDonald’s pricing engine uses machine-learning algorithms to continually analyze data from millions of daily transactions across McDonald’s nearly 14,000 restaurants and generate what the company calls “the optimal price” at each location for each menu item, from Big Macs to discounted coffee for seniors.
The engine has widened existing price differences for the same product between restaurants, including from neighborhood to neighborhood within the same area, three franchisees told Reuters.
They already have different prices for different McDonald’s. Whether they use AI or an employee comparing spreadsheets makes little difference, except perhaps to that employee. We used to get the bundle box routinely from one mcdonalds until we realized that very same item was like $4 cheaper across town. That one is further so now we just rarely get McDonald’s.
Guess it just makes it easier for them. Back in the day they needed to task some employee per franchisee. Now it’s done by one central AI. And it enables more innovation. An AI can be quicker and more dynamic. Recalculate prices multiple times a day… In theory and now that they got those electronic checkouts plus AI they could customize the upselling to individual customers. And those kinds of things.
I used to visit McDonald’s regularly back in high school, but then the local McDonald’s had “euro deals” which was either the regular hamburger or the cheeseburger (switched every week) for €1. And they were open until like 5 in the morning so it was cheap and available if I was on the way home and a bit hungry after a night out.
But now they already close in the evening, their prices have risen a ton, and the portion sizes seem to have gotten ridiculously small. A “large” menu with one of their biggest burgers costs like €20, and for that I get a mushy, bland industrial burger that I can eat in about 3 bites, and like 10 or so fries. It’s more like a snack than a meal. I rarely eat fast food, because every time I try it I end up still hungry afterwards and disappointed with the quality and cost.
And just down the street from the McDonald’s here, there’s a “frituur” (a typical Belgian takeaway place that sells fries, burgers and fried snacks), and their “small” portion is at least 5x more than McDonald’s “large” portion, more than I can eat, and much better in flavour too. And their burgers are also bigger and better than McDonald’s offering. Best of all, a full meal there is like €12, and after that I’m completely stuffed and still have leftovers to feed to my dogs or chickens.
McDonald’s, and the other big fast food chains like Burger king and KFC are all just overpriced, undersized garbage. I really don’t understand why people go to them often enough to keep them in business while there are so many alternatives available which are both better and cheaper. At least in this area.