McDonald\u2019s is facing a federal lawsuit that alleges its AI-enhanced pricing tool violates antitrust laws because it shares nonpublic data with franchisees who might be competing in the same market.<\/p>\n
The lawsuit, which was filed Friday in Illinois, said McDonald\u2019s pricing tool uses artificial intelligence to collect data that competing franchises wouldn\u2019t normally share, like store-level sales. The Chicago-based burger giant has said it makes the tool available to US franchisees to help them set prices at their individual restaurants.<\/p>\n
The lawsuit also blames the pricing system for raising McDonald\u2019s US prices.<\/p>\n
\u201cMcDonald\u2019s 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 US restaurants,\u201d the lawsuit states. \u201cThe result is algorithmic price-fixing aimed at customers who are already stretched thin.\u201d<\/p>\n
McDonald\u2019s said that the lawsuit is \u201cfilled with inaccuracies\u201d and it would vigorously defend itself.<\/p>\n
\u201cAI does not set menu prices at McDonald\u2019s restaurants \u2013 McDonald\u2019s franchisees do,\u201d the company said in a statement. \u201cOptional 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.\u201d<\/p>\n
The lawsuit was filed on behalf of a consumer, Michael Thomas, of DeKalb, Illinois. According to the lawsuit, Thomas frequently visits McDonald\u2019s and orders a Quarter Pounder with cheese, french fries and a Coke. The lawsuit said Thomas noticed price differences between McDonald\u2019s stores near his home.<\/p>\n
McDonald’s 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\u2019s sales, location and other factors, including competitors\u2019 prices.<\/p>\n
McDonald’s said that long before adopting the AI-enhanced tool, it collected data and recommended prices to its franchisees, who own and operate 95% of McDonald\u2019s 14,000 US stores.<\/p>\n
\u201cAll we do is provide the context of what\u2019s going on,\u201d a McDonald\u2019s spokesman told The Associated Press. \u201cWe don\u2019t have any way to affect the menu pricing in a restaurant.\u201d<\/p>\n
But the lawsuit said McDonald’s has \u201csignificant leverage over its franchisees\u201d and can pressure them to follow its pricing recommendations.<\/p>\n
The Associated Press left a message Tuesday with the National Owners Association, which represents McDonald\u2019s franchisees.<\/p>\n
McDonald\u2019s has been experimenting with various value strategies in the U.S. and other markets for several years as it tries to win back lower-income consumers, whose visits to fast-food chains have dropped.<\/p>\n
But franchisees don\u2019t always follow its guidance. During a conference call with investors in August, McDonald\u2019s Chairman and CEO Chris Kempczinski said only 60% of its US restaurants were offering McDonald\u2019s proposed menu of 10 items for under US$3 (NZ$5.33)<\/p>\n
\u201cAs you know, in our system, that\u2019s not something that we just flip the switch on,\u201d Kempczinski said. \u201cIt requires conversations with franchisees.\u201d<\/p>\n
The lawsuit asks the judge to certify the case as a class action and to require McDonald’s to pay damages to the class. It also seeks to prevent McDonald’s from enforcing agreements that restrict competition.<\/p>\n
The morning’s headlines in 90 seconds, including the washup from the last night\u2019s election debate, and an NBA star shows up at a French rugby training. (Source: 1News)<\/p>\n","protected":false},"excerpt":{"rendered":"McDonald\u2019s is facing a federal lawsuit that alleges its AI-enhanced pricing tool violates antitrust laws because it shares…\n","protected":false},"author":2,"featured_media":622833,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[365,363,364,67,144,111,139,64,69,145],"class_list":["post-622832","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-crime-and-justice","tag-food-drink","tag-new-zealand","tag-newzealand","tag-north-america","tag-nz","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/622832","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=622832"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/622832\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/622833"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=622832"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=622832"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=622832"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}