McDonald's uses AI to price burgers
“You're not pricing the burger anymore. You're pricing me, you're pricing you, the consumer.”
Transcript
McDonald's is now using AI to help decide what your next Big Mac should cost. And honestly, the AI is neither the most interesting part. The interesting part is the question is trying to answer. How much are people in this exact neighborhood willing to pay? McDonald's has a pricing engine analyzing millions
of transactions across nearly 14,000 restaurants. It can look at what people are buying, what competitors nearby are charging, how sensitive customers are to price, and then recommend the optimal price for individual menu items, which can create some pretty wild differences. Reuters found that a Big Mac in Fresno
is selling for $5.69, but just two miles away, $6.89. Now Reuters couldn't confirm that AI caused that specific difference, but franchisees say pricing differences between locations have gotten wider. And this is where I think it gets really interesting.
Airlines have trained us to accept that the person sitting next to us might have paid half of what we paid. Uber trained us to accept that the exact same ride might cost twice as much an hour later. Now McDonald's is basically asking, "Will consumers accept the same logic for a hamburger?" But there's another layer here.
McDonald's corporate makes money when statewide sales go up. Franchisees actually have to deal with wages, rent, food costs, and store level margins. And restaurant expenses have reportedly jumped 36% since 2019. So AI might be incredibly good at finding the optimal price,
but optimal for who? McDonald's, the franchisee, the consumer, you? Because AI can probably figure out exactly how much you're willing to pay for a Big Mac. The bigger question is, how far brands can push that pricing power before customers realize?
And wait a second, you're not pricing the burger anymore. You're pricing me, you're pricing you, the consumer. Every business, every industry, there's a larger opportunity hiding inside of it. I'm here to help you find them. Follow me for more tech and AI news.