Reuters Article - Full Text

For those frustrated by paywalls, I have obtained special permission to post the text of this week's Reuters article about McDonald's AI pricing HERE.

The article includes a video by the reporter Waylon Cunningham. If anyone had trouble playing the video, here's a nice, clean copy on YouTube.

MCD Corporate Suit Defends Price Fixing

 

Jon Banner

@jon_banner1

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57m

For the record: AI does not set Big Mac prices, make automatic price changes, or determine what individual customers pay.

@Reuters

got it wrong.

@McDonalds

provides tools and recommendations, not automatic pricing. Franchisees set menu prices. We provide insights that help franchisees deliver better value for customers and run successful businesses.

Reuters Discusses Some of the Legal Issues Around Pricing

Here's the Reuters article that WallStreetApes mentions

You should get 2 or 3 free visits, and then Reuters will ask you to subscribe for a nominal fee. Waylon spent a couple of months working on this topic.

Taking Price Fixing to the Next Level

Opinion from @WallStreetApes on X 

Wall Street Apes

@WallStreetApes

HERE WE GO AI powered Dynamic Pricing comes to McDonald's McDonald’s is using an AI-powered pricing engine to help determine menu prices based on transaction data and "customer willingness to pay" The AI engine doesn’t just look at McDonald’s sales. It also scrapes public menu prices from nearby Burger King and Wendy’s and folds those into the “optimal price.” The algorithms estimate “customer willingness to pay” at each restaurant and according to Reuters, store franchise owners say the company pressures them to use AI pricing tools "McDonald’s pricing engine uses machine-learning algorithms to continually analyze data from millions of daily transactions across McDonald’s nearly 14,000 restaurants and generate what the company calls “the optimal price” at each location for each menu item” - Reuters It’s a big difference 2 McDonald’s locations just 2 miles apart in Fresno, California were selling the same Big Mac for $5.69 vs $6.89. That’s a 21% difference The franchisee dashboard literally grades stores on how much locals will tolerate: “Your restaurant is showing MEDIUM SENSITIVITY to Price” based on “customer willingness to pay in your area.” This is every nightmare we were worried about coming true

Maze Qoutes McDonald's Chief Financial Officer

"Ian Borden, the company's CFO, said that the sector is developing locations faster than demand can support that development."

Then why in the world are they rushing to open more stores in the USA? Didn't they know this when they launched Accelerating the Arches?

McDonald's has low expectations for fast food sector growth

Maze Quotes PJB

On McDonald's Investor Day, Restaurant Business editor-in-chief Jonathan Maze interviewed the McDonald's CEO. Some of the comments are in his articles. This interesting post appeared on Jonathan's "X" account.

Jonathan wrote: McDonald's stock is up a bit today, which is good. But the company's stock fell nearly 5% yesterday during the Investor Day presentation. Wall Street is skeptical for a few reasons, but the biggest is concern over whether the franchisee base is willing to go along with the modernization initiative. And the company will definitely need to overcome that operator skepticism. The Next upgrades would come along with typical remodels, so the typical store is looking at $1.2 million in upgrades over the coming years. The company believes that its own investments ($8.5 billion worth worldwide over the next decade), efficiency (250bp/$100k in cash flow), and perhaps remodel sales lifts plus market share gains will all help fund it. Efficiency and market share gains are definitely a good thing, and there's no question that McDonald's needs to do things to make itself more competitive in a flat traffic environment. And the previous remodels have made the company's estate look far better than any of its competitors. But cash flow among operators has taken a hit of late, and the weak sales results more recently have not helped. $1.2 million/per store for various remodels and upgrades is a big lift. We told CEO Chris Kempczinski that some operators are still repaying their debt from the previous remodel. Here's what he said. He said a lot of other things also.

Yes, He Said It:

 PJB on 8/04/26: (Franchisees) “They’ve got a lot of borrowing capacity still,” he said. “I feel very confident we’ll be able to get this thing done.”

Anonymous on 8/05/26: "Borrowing capacity is not cash flow"

Opinions From Seeking Alpha

McDonald's NEXT initiative leaves Wall Street questioning success

McDonald's investor day selloff makes MCD a BUY

Skye and Her “Honest Conversations” with McDonald's Franchisees

McDonald's USA President comes in at a crucial time - Maze

MCD Shareholders Say:

MCD shares down $15 today. Four-year low of $235 - CNBC

At the close MCD traded at $238.32, down $12.

MCD Also Says:

 

Jonathan Maze

@jonathanmaze

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32m

The total cost for McDonald's U.S. store upgrades will be somewhere around $17 billion total, including typical remodels and Next improvements. Some will come from the company. Franchisees will fund the rest. Company planning efficiency improvement.

MCD Corp Says:

Jonathan Maze

@jonathanmaze

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27m

McDonald's AUVs are $4 million in the US. Average franchisee cash flow $500,000/restaurant. In its more developed global markets, volumes are $4.5 million, cash flow $400,000.