McDonald’s is facing a lawsuit in federal court over its alleged use of an AI tool to determine pricing across independent franchises, which prosecutors say violates antitrust laws and has unfairly inflated menu prices for Americans. The vast majority of McDonald’s US stores are independently owned and are said to individually decide on prices under company policy. Antitrust laws require businesses to set prices independently from their competitors, as coordinating prices can stifle market competition and push up costs for consumers.
The lawsuit, filed on 2 October in a federal Chicago courtroom, alleges that McDonald’s AI tool is illegal because it amounts to independent franchise locations exchanging nonpublic price and sales data. The result is algorithmic price-fixing aimed at customers who are already stretched thin.” In response to the lawsuit, a spokesperson for the McDonald’s corporation said that the “complaint is filled with inaccuracies and we will vigorously defend against this lawsuit”. McDonald’s contested that characterization, calling the reporting “speculative and uninformed”.
The litigation, which has been proposed as a nationwide class-action lawsuit, was first brought forward by an Illinois man named Michael Thomas. Thomas, a McDonald’s regular who is described as “price conscious”, found that the cost of his usual order – a Quarter Pounder with cheese, fries and a Coke – varied even within his neighborhood in DeKalb, Illinois. The attorney listed as representing Thomas did not immediately reply to a request for comment.
Thomas does not appear to be alone in his experience. At a McDonald’s in Manhattan’s financial district, Chukwama Okeke, 43, was finishing a mango-pineapple smoothie that he bought as part of a value meal that cost about $15 – something he only gets about once a month. Okeke said that when he orders the same meal at a McDonald’s in Brooklyn’s Crown Heights neighborhood, he ends up paying closer to $9.
So far this year, at least 90 pieces of legislation have been filed across the country to push back against algorithmic price-fixing, according to Lindsay Owens, the head of the left-leaning thinktank Groundwork Collaborative, who recently authored a book on the topic. McDonald’s acquired an AI company, Dynamic Yield, in 2019, but has firmly denied using AI in setting menu prices. In a statement released on 1 October, the day before the lawsuit was filed, the chain denied using dynamic pricing and described its pricing tool as simply providing information that franchises are free to decide whether to adopt.
The fast-food chain has been scrutinized over recent years for its elevated prices, and went viral in 2023 over an $18 Big Mac meal at a Connecticut McDonald’s. The franchise’s owner filed a lawsuit alleging that it was the AI pricing tool that suggested the $18 price to the franchise. According to a fact sheet the chain published in 2024, the average price of a McDonald’s menu item increased about 40% between 2019 and 2024.
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