- McDonald's faces a proposed nationwide class action in federal court in Chicago alleging it violated U.S. antitrust law by coordinating menu prices across company-owned and franchised restaurants using an AI-powered pricing system.
- The lawsuit claims McDonald's has, since at least 2019, replaced independent pricing with a 'coercive price-fixing agreement' and that franchisees refusing the shared pricing tool risk losing their restaurant investments.
- Reuters reported the pricing engine uses machine-learning algorithms to analyze millions of daily transactions across nearly 14,000 restaurants and suggest an 'optimal price' per item per location; three franchisees said it widened price differences for the same products between restaurants.
- McDonald's rejected the allegations as speculative, saying franchisees set menu prices independently and that it only provides tools, resources, research and recommendations.
- Wells Fargo cut its McDonald's price target while keeping an Overweight rating, calling the Analyst Day message 'hard to digest'; Guggenheim cut its target and EPS estimates on weaker U.S. same-store sales, slower global unit growth and higher capital spending.
- MCD is down nearly 25% year to date and on track for its worst annual performance since 2002, with Stocktwits retail sentiment falling to 'bearish' from 'neutral'.
Quotes
“AI does not set the price of a Big Mac or any other menu item.”
“hard to digest”
“coercive price-fixing agreement”