Senator Elizabeth Warren and four other Democratic lawmakers have questioned McDonald's CEO Chris Kempczinski regarding the company's use of algorithmic pricing tools. In a letter dated November 2, the group expressed concerns that these tools might be employed to "squeeze consumers into paying higher prices" and potentially enable collusion between franchisees.
The lawmakers cited a Reuters report from September 29, which indicated that McDonald's utilizes machine learning algorithms to suggest "optimal price" recommendations for menu items at individual restaurants. These recommendations reportedly consider an estimate of how much local customers might be willing to pay.
In their letter, the representatives, including Greg Casar (D-Texas), Becca Balint (D-Vt.), Jesus Garcia (D-Ill.), and Mary Gay Scanlon (D-Pa.), posed several questions to Kempczinski. They asked whether the AI pricing tools incorporate individual consumer data from McDonald's loyalty program, how franchisees are encouraged to use these tools, and what antitrust reviews were conducted prior to their implementation.
The lawmakers requested a response by November 16. McDonald's has not yet commented on the letter. Following the earlier Reuters report, the company stated that its pricing tools do not base recommendations on individual customers. McDonald's also noted that franchisees are free to set their own prices and that the pricing tools are not mandatory.
The company described the Reuters reporting as "speculative and uninformed claims that attempt to recast a standard business practice as something controversial." McDonald's added that its franchisees make their own pricing decisions and that the use of pricing recommendation tools and analytics is widespread.
Three franchisees reportedly told Reuters in September that the pricing engine's recommendations had led to wider price discrepancies between nearby restaurants. Additionally, two class-action lawsuits have recently been filed in federal court, alleging that McDonald's illegally coordinates menu prices across its franchised and company-owned locations through a centralized algorithmic pricing system.