McDonald's says AI will not determine the price of the Big Mac, and franchisees hold the final pricing authority. However, under antitrust law, who makes the final decision and whether each restaurant competes independently are two separate questions that must be addressed individually.

When headquarters aggregates sales data from all stores, outputs store-level price recommendations, and tracks deviations between actual and recommended prices, whether “final confirmation by humans” can demonstrate independent pricing requires further review.

Note: This article is for academic and policy research purposes only and does not constitute any investment or legal advice.

I. Why did the shared pricing system lead to litigation?

On October 2, 2026, Illinois consumer Michael Thomas filed a proposed nationwide class action lawsuit in federal court in Chicago, naming McDonald's USA, LLC and McDonald's Corporation as defendants. The plaintiff alleges that McDonald's violated Section 1 of the Sherman Antitrust Act by using a centralized pricing system that aggregates non-public operational data to coordinate menu prices among franchisees and company-owned stores.

These allegations have not been determined by a court. McDonald's denies price coordination, stating that the system merely provides information and recommendations, and franchisees independently determine their prices and may choose not to follow the suggestions.

A Reuters survey on September 29 found that McDonald's pricing engine continuously analyzes millions of transactions daily across nearly 14,000 restaurants nationwide, determining what it calls the "optimal price" for individual stores and items, while assessing local customers' price sensitivity.

The term "optimal price" here refers to the system's calculation based on its business objectives and should not be interpreted as higher prices being better or as maximizing consumer benefit. Assessing local market demand should also be distinguished from setting prices for individual consumers. McDonald's has clearly stated that it does not implement dynamic pricing or charge different prices to individuals.

Using data analysis to assess demand, costs, and competitive conditions is a common business practice. Antitrust concerns arise from the relationships between participants.

Most McDonald's restaurants in the United States are operated by franchisees. Restaurants owned by different franchisees, as well as franchised locations versus company-owned stores, may compete locally for customers. However, not every outlet is an independent competitor: a single franchisee may own multiple restaurants, and nearby outlets may not belong to the same market. Competitive relationships must be assessed based on the operating entities and actual customer choices in the local area.

The mechanism proposed by the plaintiff is that each store submits non-public operational data to the headquarters system, which centrally processes the data and then outputs pricing recommendations to the stores. Even if franchisees cannot directly view data from other stores, the plaintiff may still argue that the shared system has already aggregated information and coordinated pricing on their behalf.

Two: Is the "recommended price" legally binding?

Retaining final pricing authority is an important basis for McDonald's defense, but this alone cannot exempt it from antitrust liability. If market participants have already restricted price competition through a coordinated arrangement, and the final confirmation is made by one party, this does not alter the nature of the arrangement.

Similarly, the fact that various restaurants use the same set of tools is not sufficient to prove collusion. The plaintiffs must still demonstrate that the relevant operators formed a concerted arrangement prohibited by law. Collecting data at headquarters does not equate to franchisees having reached a price agreement; similar algorithmic recommendations cannot substitute for proof of mutual consent.

In 2024, the U.S. Department of Justice sued the property software company RealPage, alleging that it coordinated rents using non-public data from competing landlords. The Department’s claims against the company were later resolved through a settlement, and the court entered a final judgment in May 2026 without adjudicating the disputed facts or determining that the defendant violated the law. RealPage provided a reference for examining a common pricing system, but it does not directly determine the outcome of the McDonald’s case.

McDonald's franchise structure also complicates the issue. The headquarters and franchisees have collaborative relationships regarding branding, promotions, and management, which may help the overall brand compete with other chains. At the same time, there may be price competition among franchisees themselves, as well as between franchisee-owned and company-owned stores. The court must distinguish between legitimate business guidance and price coordination facilitated by the headquarters.

Whether the "recommendations" carry actual enforceability is one important fact. According to a Reuters investigation, new operating standards taking effect in January 2026 require franchisees to engage in "constructive interaction" with pricing advisors and tools approved by the company. The company tracks deviations from recommendations, and some franchisees report having been contacted by headquarters personnel due to pricing deviations from the recommendations.

These situations warrant investigation, but there is still a gap between documenting deviations and asking for reasons, versus compelling acceptance of recommendations. The headquarters holds authority over renewal, expansion, and other matters, which may heighten franchisees' concerns about rejecting suggestions. To determine whether these concerns constitute actual constraints, it is necessary to ascertain whether these powers have been used to exert pressure and whether franchisees can consistently adopt different pricing strategies.

Therefore, the franchisee’s rejection of recommendations constitutes relevant evidence; the headquarters’ tracking of deviations also constitutes relevant evidence. Both must be evaluated within the context of the specific operational relationship.

Three: Algorithms do not always drive price increases

The headquarters and franchisees may not prefer the same price.

McDonald's annual report shows that rent and royalty fees from traditional franchise operations are primarily tied to sales, with additional minimum guaranteed rent. Franchisees must pay expenses such as labor, ingredients, and rent from their revenue. The same price reduction measure, even if it increases sales, may not increase store profitability, potentially leading to disagreements between both parties.

Reuters also reported that some franchisees noted the system's recent recommendations have become more conservative, sometimes suggesting price reductions. However, the occurrence of price reduction recommendations does not directly rule out anti-competitive risks. A price lower than before may still be above the competitive price absent the alleged arrangement; price increases could also stem from changes in costs or demand, and collusion cannot be inferred solely from price hikes.

Economic analysis requires comparing prices and competition under the alleged arrangement versus without it. Consumers seeking compensation must also explain how the alleged arrangement reduced competition and what losses resulted.

IV. Conclusion

Who controls the pricing process is an important clue to understanding this case, but it cannot replace an assessment of the agreement, competition restrictions, and consumer harm.

The court ultimately needs to determine whether this system is assisting restaurants in making business decisions, or whether it has facilitated a coordinated arrangement among operators who might otherwise compete, thereby causing consumers to pay the price for reduced competition.

References:Scarcella, M. (2026, October 5). McDonald’s hit with class action alleging AI-powered menu price-fixing. Reuters.