Lawmakers sent a formal letter to McDonald's CEO Chris Kempczinski seeking details on data utilization and antitrust evaluations connected to automated menu recommendations. The inquiry follows two federal consumer class action lawsuits that accuse the chain of coordinating prices centrally via algorithms. While franchisees noted the engine increases price gaps between nearby stores, McDonald's contends the suggestions are optional tools that protect franchisee independence.
Key points
Lawmakers are probing McDonald's over concerns that dynamic pricing algorithms lead to hi…: Lawmakers are probing McDonald's over concerns that dynamic pricing algorithms lead to higher consumer costs and illegal coordination.
McDonald's faces ongoing legal challenges, including two federal class action lawsuits al…: McDonald's faces ongoing legal challenges, including two federal class action lawsuits alleging centralized price-fixing across franchise locations.
The fast-food chain maintains that its pricing tools are standard advisory mechanisms tha…: The fast-food chain maintains that its pricing tools are standard advisory mechanisms that leave final decisions to independent franchisees.
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Nov 3 - US Senator Elizabeth Warren and four other lawmakers questioned McDonald's use of algorithmic pricing tools in a letter to CEO Chris Kempczinski, which the lawmakers shared with Reuters.
The letter, dated November 2, cites a Reuters story from September 29 that found McDonald’s uses machine learning algorithms to generate what the company calls the “optimal price” recommendations for each menu item at each restaurant, based in part on an estimate of how much each store’s typical patrons are willing to pay.
“We are concerned that McDonald’s may be using AI to squeeze consumers into paying higher prices, and that its AI pricing tools may facilitate collusion between franchisees who should be operating as competitors,” reads the letter, which was signed by Warren, a Massachusetts Democrat, along with Democratic Representatives Greg Casar, Becca Balint, Jesus Garcia and Mary Gay Scanlon.
The letter asks Kempczinski several questions, including whether the pricing tools use individual consumer data from McDonald's loyalty program, how franchisees might be encouraged to use the tools, and what antitrust review was done before the tools’ deployment.…
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