McDonald’s is facing a lawsuit in federal court over its alleged use of an AI tool to determine pricing across independent franchises, which prosecutors say violates antitrust laws and has unfairly inflated menu prices for Americans.

The vast majority of McDonald’s US stores are independently owned and are said to individually decide on prices under company policy. Antitrust laws require businesses to set prices independently from their competitors, as coordinating prices can stifle market competition and push up costs for consumers.

The lawsuit, filed on 2 October in a federal Chicago courtroom, alleges that McDonald’s AI tool is illegal because it amounts to independent franchise locations exchanging nonpublic price and sales data.

“This case is about McDonald’s bringing ‘optimization’ to America’s largest fast food chain,” the complaint says. “McDonald’s has built and for years deployed its own information-sharing pricing platform, which draws on data from its millions of daily transactions to set menu prices across thousands of US restaurants. The result is algorithmic price-fixing aimed at customers who are already stretched thin.”

In response to the lawsuit, a spokesperson for the McDonald’s corporation said that that the “complaint is filled with inaccuracies and we will vigorously defend against this lawsuit”.

“AI does not set menu prices at McDonald’s restaurants – McDonald’s franchisees do,” it said. “Optional tools are available to franchisees to help them make the best decisions for their businesses and customers, but these tools do not automate, coordinate or fix pricing in any way.”

A recent Reuters investigation reported that some McDonald’s franchise owners have been pressured by the company to use the AI pricing tools and record their deviations from the tool’s recommendations. McDonald’s pushed back against that characterization, calling the Reuters reporting “speculative and uninformed”.

The litigation, which has been proposed as a nationwide class action lawsuit, was first brought forward by an Illinois man named Michael Thomas. Thomas, a McDonald’s regular who is described as “price conscious”, found that the cost of his usual order – a Quarter Pounder with cheese, fries and a Coke – varied even within his neighborhood in DeKalb, Illinois. The attorney listed as representing Thomas did not immediately reply to a request for comment.

Thomas doesn’t appear to be alone in his experience. At a McDonald’s in Manhattan’s financial district, Chukwama Okeke, 43, was finishing a mango-pineapple smoothie that he bought as part of a value meal that cost about $15 – something he only gets about once a month.

Okeke said that when he orders the same meal at a McDonald’s in Brooklyn’s Crown Heights neighborhood, he ends up paying closer to $9.

“McDonald’s in Manhattan is much more expensive than those in Brooklyn,” he said. “I’ve notice in some areas if they have a lot of like food traffic, the prices tend to get higher.”

Beatriz Milander, 27, who ordered a snack wrap, a small fries and an iced coffee for $11.51, hadn’t noticed a huge difference between what she pays in the financial district and what she pays in her Bronx neighborhood, but said prices overall have inched up.

“In the last few months, I’ve seen them do more deals or like lower-priced things,” she said. “But it definitely was pricing up for a little bit there.”

Experts say that companies using AI to set or alter pricing could exacerbate the country’s affordability crisis and make it harder for Americans to bear everyday costs. So far this year, at least 90 pieces of legislation have been filed across the country to push back against algorithmic price-fixing, according to Lindsay Owens, the head of the left-leaning thinktank Groundwork Collaborative, who recently authored a book on the topic.

McDonald’s acquired an AI company, Dynamic Yield, in 2019, but has firmly denied using AI in setting menu prices. In a statement released on 1 October, the day before the lawsuit was filed, the chain denied using dynamic pricing and described its pricing tool as simply providing information that franchises are free to decide whether to adopt.

The fast-food chain has been scrutinized over recent years for its elevated prices, and went viral in 2023 over an $18 Big Mac meal at a Connecticut McDonald’s. The franchise’s owner filed a lawsuit alleging that it was the AI pricing tool that suggested the $18 price to the franchise.

According to a fact sheet the chain published in 2024, the average price of a McDonald’s menu item increased about 40% between 2019 and 2024.