Walmart, McDonald’s push back against dynamic pricing fears

As the public backlash to tech-powered pricing practices continues, two major companies are playing defense.

After a Reuters report last week revealed McDonald’s is allegedly using AI to determine menu prices, the fast food giant issued an extensive statement refuting the claims.

“AI does not set the price of a Big Mac or any other menu item,” the company wrote. “It does not change prices. And it does not determine what an individual customer pays.”

The company clarified that it does not use dynamic pricing, but instead “provides franchisees with tools, resources, research and recommendations to help them make informed decisions.”

What McDonald’s calls its “pricing recommendation tool” provides restaurants with data to inform their decisions, but ultimately individual franchisees set the prices, according to the company.

Per the Reuters report, which is based on screenshots of the technology obtained by the news outlet, the tool analyzes millions of transactions to generate an “optimal price” for each item at each location.

• Now McDonald’s is facing a class-action lawsuit alleging the company’s use of the technology to fix prices violates US antitrust laws.

Walmart, meanwhile, is on its second public statement about pricing in as many weeks.

Following a message from CEO John Furner earlier this month that Walmart would not engage in personalized pricing, the company released a public letter to an outspoken critic of its investments in pricing technology.

The letter claims that Lindsay Owens, president and CEO of the Groundwork Collaborative, mischaracterized Walmart’s rollout of digital shelf labels as part of a plan to implement “real-time dynamic pricing.”

“You framed these examples as what the technology could enable, but repeatedly using Walmart to illustrate them implies this is where our business is headed,” EVP of Corporate Affairs Dan Bartlett wrote. “It is not.”

Groundwork Collaborative analyzed Walmart’s patents over the last decade and is now arguing these technologies could be used to “profile and track” customers.

Owens has since responded to the letter, saying “the confusion around Walmart’s pricing practices is of its own making. Walmart says one thing in its damage-control letters to customers, another to its investors behind closed doors, and a different thing entirely to the United States Patent and Trademark Office.”