McDonald's AI ‘Pricing Engine’ Gauges What Customers Will Pay for a Big Mac: Report

What happened

Machine-learning models set an 'optimal price' per item per restaurant, and have widened the gap between branches two miles apart. Decrypt News Artificial Intelligence McDonald's AI ‘Pricing Engine’ Gauges What Customers Will Pay for a Big Mac: Report Machine-learning models set an 'optimal price' per item per restaurant, and have widened the gap between branches two miles apart.

In brief McDonald's is using machine-learning models to recommend menu prices across nearly 14,000 restaurants, Reuters reported. One input is an estimate of how much customers at each location are willing to pay.

Franchisees say the system has widened price differences between nearby stores, and McDonald's tracks deviations from its recommendations. McDonald's is using machine-learning models to guide what it charges for menu items, with one input being an estimate of how much the customers at each individual restaurant will tolerate paying, the Reuters news agency reported. The system analyzes millions of daily transactions across nearly 14,000 restaurants and produces what the company calls an “optimal price” for every menu item at every location.