The trick: Scope Swap
McDonald's is using AI to 'dynamically' price your burger.
The Reuters report behind that line describes a per-store price recommender, and says it could not tie the Fresno Big Mac gap to it.
Engadget, summarizing Reuters, said McDonald's has been using AI to dynamically price menu items.
Before you read on. Your call?
TRUE, BUT
21%
Reuters describes an engine that analyzes transactions across nearly 14,000 restaurants and recommends 'the optimal price' at each location for each item. McDonald's calls it 'a tool, not a mandate,' and its terms say franchisees are 'always free to determine the final price,' though five owners told Reuters they were pressured to use it.
The twist
The headline example, a Big Mac at $5.69 in one company-run Fresno store and $6.89 two miles away, is one Reuters itself could not tie to the engine. And in recent months the engine has pushed more conservative pricing, including some decreases.
There’s more to this story.
Membership opens the full investigation, the strongest counterargument and what to do with what you’ve learned.
Start your free month →First membership: 30 days free, then A$89 a year. One introductory trial per customer. Card required; renews annually until cancelled. Cancel before the trial ends to avoid the first charge. Already a member? Sign in
Couldn't check your access. That's on us.
The trick has a name
We call it Scope Swap: applies to far less than it sounds like. You'll see it again. Learn to spot it →
Receipts
- Supports engadget.com:
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
- Supports cnbc.com:
a company-run store in Fresno, California sells a Big Mac for $5.69, but another company-run restaurant two miles away sells the same sandwich for $6.89, a 21% premium.
- Refutes cnbc.com:
Reuters could not confirm if the price difference is the result of the price engine's recommendations or other factors.
- Context cnbc.com:
generate what the company calls "the optimal price" at each location for each menu item
- Context rnz.co.nz:
But in recent months the engine has pushed more conservative pricing - including some decreases - causing friction between franchisees and corporate headquarters.
- Context rnz.co.nz:
McDonald's says its franchisees are free to set their own prices, but five store owners told Reuters the company pressured them
- Context dailycaller.com:
which means customers may pay different prices for the same food depending on which location they visit.
- Context rnz.co.nz:
Its pricing portal is "a tool, not a mandate, designed to provide restaurant-specific recommendations to help franchisees deliver value for customers and make informed business decisions," McDonald's said.
- Context rnz.co.nz:
The document also says franchisees are "always free to determine the final price." Reuters reviewed the pricing portal's terms of service in August.
- Context cnbc.com:
McDonald's has used some form of an AI pricing tool since at least 2019.
- Context rnz.co.nz:
McDonald's said in a statement costs and other factors vary across its stores, and that restaurants even a few miles apart can belong to distinct markets.
- Context cnbc.com:
the headquarters makes the vast majority of its money from taking a percentage of its franchisees' total revenue
- Supports rnz.co.nz:
Screenshots of the interface franchisees use, reviewed by Reuters, show messages including: "Your restaurant is showing medium sensitivity to price" based in part on "customer willingness to pay in your area."
- Supports rnz.co.nz:
The engine has widened existing price differences for the same product between restaurants, including from neighbourhood to neighbourhood within the same area, three franchisees told Reuters.
- Context rnz.co.nz:
A franchisee document from June reviewed by Reuters shows McDonald's records franchisees' deviations from the recommendations in detail.
- Supports rnz.co.nz:
it is particularly important for all Users of the Tool to understand and comply fully with anti-trust and competition laws.
- Context rnz.co.nz:
Some franchisees say the engine recommended large price increases during the pandemic and afterwards, as inflation soared.
- Context rnz.co.nz:
Pushing lower prices to attract more customers and lift sales can boost the corporation's bottom line
- Context rnz.co.nz:
Franchisees, by contrast, have stronger incentives to raise prices to help cover the rising wages, rent and other restaurant expenses
- Context cnbc.com:
uses machine-learning algorithms to continually analyze data from millions of daily transactions across McDonald's nearly 14,000 restaurants
- Context rnz.co.nz:
A Reuters check of prices in September on the McDonald's mobile app showed price differences.
- Context rnz.co.nz:
The pricing portal's terms of service warn that owners "may be competitors of each other"
Open the Receipts Pack → What each source proves, every figure traced, and what would change our verdict.