McDonald's Denies AI Price-Fixing Claims as Franchise Shift Raises Stakes
McDonald's is defending itself against a federal lawsuit claiming its AI-assisted pricing recommendations to U.S. franchisees amount to price fixing. The company says the suit is inaccurate and that franchisees, not AI, set menu prices. As McDonald's moves toward a nearly 98% franchised model, its revenue will depend more on franchisee sales, while the stock trades at a five-year low forward earnings multiple.
The Illinois federal complaint, brought by a DeKalb customer, claims McDonald’s pricing software uses confidential sales data and gives the chain enough bargaining power to push franchisees toward coordinated menu prices. McDonald’s rejects that account, saying its AI-assisted recommendations have existed for over ten years and that restaurant operators—not algorithms—choose what customers pay.
The company’s planned shift from roughly 95% to 98% franchised by 2028 means royalties and rent tied to franchisee sales will matter more. Its operating margin climbed from 43.7% in fiscal 2021 to 46.1% in fiscal 2025, while revenue rose from $23.2 billion to $26.9 billion. The stock trades at 17.5 times forward earnings, a five-year low.
If the lawsuit proceeds, it could shape how chains use shared data and pricing software, potentially affecting diners through menu costs and franchisees through greater scrutiny of corporate recommendations. A ruling either way may influence other restaurant brands’ practices, though any direct financial effect on McDonald’s seems limited given its size. Consumers, especially budget-conscious ones, and small-business operators may feel the broader consequences.