McDonald’s has been using artificial intelligence to dynamically price menu items in the US and some global markets, according to a report by Reuters. This involves finding the “optimal price” to match what a particular store’s patrons would be willing to pay.
This fluctuates according to location, and even stores in the same city can have different cost amounts for the same exact items, according to information reviewed by Reuters. This is basically surge pricing, like with ride-share platforms, but for hockey puck burgers that have been sitting under a hot lamp.
Reuters got a look at the interface that franchisees use to access this technology and it’s pretty creepy. Messages show stuff like “your restaurant is showing MEDIUM SENSITIVITY to price” based on “customer willingness to pay in your area.” Cost differences at nearby locations can be stark. Researchers found that a Bic Mac at a Fresno, California store cost $5.69, but the same burger cost $6.89 at another branch two miles down the road. That’s a 21 percent difference.
That has been a thing for years.
A local guy did the legwork pre-covid to price check a list of items at every McD’s in the city and found that there was a significant difference in price across the city.
The patterns he found were that franchisees were generally consistent across their own locations, and that the locations in the more affluent parts of the city tended to be more expensive.
The only real surprise was that corporate didn’t mandate exact prices across an entire market area.