Nine times out of ten, if I had to pick a side in a dispute between Sen. Elizabeth Warren and Ronald McDonald, I’d back the clown. Warren has faced years of criticism over her claims of Native American ancestry, while Ronald has spent decades selling Happy Meals and, for many people, becoming part of childhood memories.
But the choice isn’t so easy this time. Warren and four other Democrats recently sent McDonald’s CEO Chris Kempczinski a sharply worded letter seeking answers about the company’s AI-powered pricing tools.
The software estimates what customers in different areas might be willing to pay, then recommends prices intended to increase revenue. That sounds less like a helpful bit of technology and more like a way to find each customer’s financial limit. I’m not lovin’ it.
McDonald’s built its empire on inexpensive, convenient meals. You pulled into a restaurant, spent a few dollars, and got a familiar order. Now, critics worry that simple transaction is giving way to a system that uses data to work out how much a customer can be charged.
The question becomes less about what a Big Mac costs to make and more about how much the company thinks it can charge before customers decide to eat somewhere else.
One unhappy customer may not matter much to a chain of McDonald’s size. But dissatisfaction can travel, and the company serves millions of people each day. At that scale, even small price changes could add up to significant revenue — while leaving plenty of customers feeling they’ve been taken for a ride.
May I take your Orwellian order?
Companies often defend these systems with technical language. McDonald’s says its AI doesn’t set menu prices because franchisees make the final call. But franchise owners have told reporters that the recommendations have contributed to noticeable price differences between nearby restaurants. When corporate headquarters sends automated targets to franchisees, those figures are likely to carry real influence. Calling them mere suggestions feels like corporate doublespeak.
Consider two families stopping for dinner after a long workday. They order from identical menus, and the restaurants get their ingredients from the same suppliers. Yet one family could pay more simply because it lives in a neighborhood the software considers wealthier. The concern is that the system may use local economic data and other signals to estimate how much customers can afford — and charge accordingly.
That possibility turns the usual idea of pricing upside down. Prices have traditionally reflected factors such as supply, demand, and operating costs. With algorithmic pricing, customers may instead face different prices depending on where they live and what a company thinks they can pay. Rising beef prices and supply problems are one thing; using neighborhood data to squeeze more money from customers is another.
The stakes go beyond fries and burgers. Fast-food restaurants have often been places where people with very different incomes could buy the same meal at the same price. If pricing tools divide neighborhoods into separate opportunities for revenue, that shared experience could disappear.
And if the approach works across thousands of McDonald’s locations, other businesses may take note. Supermarkets, pharmacies, gas stations, and hardware stores could all be tempted to use similar software to set prices on everyday essentials based on local customer profiles.
Flimsy defenses
Many Americans are already under financial pressure. Savings are thin for a growing number of households, while rent and grocery costs continue to weigh on budgets.
Fast food once offered a small break from those worries. Now, even an ordinary meal can feel like a calculation designed to get as much as possible from a customer. You place an order at the speaker, and a pricing system may help determine what you’ll pay that day.
McDonald’s says its machine-learning tools help restaurant operators respond to changing economic conditions. That explanation doesn’t address the basic expectations customers bring to a business. Most people aren’t looking to be analyzed by an algorithm when they stop for a burger and fries. They want a quick meal — and perhaps a few minutes when they don’t have to think about their bank balance.
If prices vary according to how much a company believes a customer can afford, the idea of a fair, straightforward price starts to fade. The price displayed on a menu could become less of a promise and more of a starting point for maximizing revenue. Warren may not be the person many would expect to defend consumers, but on this question, McDonald’s has made her argument look surprisingly reasonable.
