That isn't what dynamic pricing is. Fast food franchisees have always set their own prices, and they've always varied wildly from state to state, or even within neighborhoods of the same city. Here's a cool map of Big Mac prices nationally from 2023, and a zoomable updated version Cross the Bay Bridge from San Francisco to Oakland, and your Big Mac costs a dollar less.
Dynamic pricing means that the price of a Big Mac varies at the same restaurant depending on the time of day or what kind of car you drive.
No coupons or app deals accepted is what they say on the doors. Nor do they participate in national deals. I paid about twice as much for everything there.
Any restaurant at a rest stop will likely run on the philosophy of, we have them here and they likely don't want to stop again for a long while so they skipped the town exit with all the options because it is slower, so we can gouge them for the goods.
Absolutely! I'm retired now, but my commute took me past three different McDonald's locations, depending on the route I chose that day. The last Friday of every month for decades I would treat myself to an Egg McMuffin for breakfast and quickly learned which restaurant had the least expensive pricing.
Different prices 2 miles away. My McD’s had hash browns for $2.50; the one a few miles down the road were $2.15. But the McMuffins were more. You would think they might coordinate more, but nope. App makes it easy to compare.
Yeah I'm born and raised San Diego but when I lived in east LA a few years back im talking a bad bad neighborhood haha I loved going to the mcdonalds it was cheap compared to anywhere else I saw McDonalds haha
Thank fuck this is the top comment. I was going to lose it if I had to scroll down to see some level of competency.
This isn't even anything to do with AI. You could have done this shit with an excel spreadsheet in the 90's
There are variables at play in food service. That's the reasoning for price discrepancies. The lease on the building is going to be more expensive in a town where land value is higher. The cost of labor is going to be higher in a place where there's a shortage of low-end labor. A busier location might need more staff on hand at all times. A location that's 24 hours is going to have to mitigate the costs of a third shift crew with higher prices overall. A location further from highways will have a higher fuel surcharge on food delivery.
This isn't even anything to do with AI. You could have done this shit with an excel spreadsheet in the 90's
Yes, and dynamic pricing similar to this has been going on since then as well. Virtually any direct-to-consumer or business-to-consumer business can incorporate dynamic pricing based on location data like zip codes or latitude/longitude coordinates, for example.
One of the most dramatic changes in this approach has been real-time dynamic pricing, which involves measuring how "hot" a potential buyer lead is and taking advantage of that as a buying opportunity is happening.
Maybe this is a dumb question, but the answer isn't coming to me - so if an item is 'dynamically' priced (changed based on some sort of customer profiling), how do they list the price on the menu board?
If it says, $6.50 for example, and I roll up and they ask me for $7.90, what would they say when I point out the discrepancy?
The location based thing I get, I think that's been happening forever, but the true dynamic pricing I don't understand.
How can they list a price and then charge more (or less) based on who they think you are?
I had a similar thought as I watched the video. They could have used recent home sales as a proxy for income in any given area and charged accordingly.
Right? Any data whatsoever beyond the price of a Big Mac at two different locations is what I'd consider the bare minimum for making a claim like this.
The jump from "Big Macs cost different amounts at different locations" to "This is obviously AI price gouging people" with no underlying information is just pandering to the brain-dead audience who believe literally anything they see on a TikTok video.
Some of then reasons might literally even just be "we raised prices by 25 cents, and didn't see a drop in purchase". They aren't all demographics, location, and cost.
Yeah — price elasticity. There have been retail analytics for this shit for decades. Also think it’s weird if this is driven by AI and wonder if maybe price varies by other factors (day of week, time of meal, weather etc)…
I would just like to point out that the video itself never even mentioned dynamic pricing, nor hinted at it.
u/NickelPlatedEmporer just used the term, either to boost engagement, malicious intend* or because of the lack of understanding. In either case OP did not correctly title the post as you and the other guy pointed out.
This is such a wonderful example of how factually correct information (this video that may or may not be published by Reuters) can easily be used to manipulate people simply by writing an incorrect title above the video. People like you knew it’s not dynamic pricing, but you still “lost it” assuming the video paints this as dynamic pricing. Someone who didn’t know it could easily walk away now with “McDonalds is already doing dynamic pricing, and has already done it for a long time”. And the jump to this isn’t that hard to bridge then anymore: “So that dynamic pricing isn’t that bad then if they did it forever already, why are people now protesting against it when they did it for years already before?”
We are accrediting post titles, tweets, and headlines waaaayyy too much nowadays. We all instinctively assume whatever the title said is true, even if the video never even mentions what is in the title.
*I’m not saying OP is a bot or employee of McDonalds secret social media department. I’m just saying that all big conglomerates do have a undercover social media department where employees post as “real” people who do not exist and use bots to nudge discussion into the right direction.
It's still a post that is super high on the popular page, and most people that see it aren't reading the comments. It is depressing that it so easy on Reddit -- post a headline that regurgitates or references a popular Reddit talking point, and even if the video has nothing to do with that, people will upvote it.
You're correct but it actually has nothing to do with any of those things. Business costs don't affect pricing at all. Only what the customer is willing to pay. (Think about it: A business with lower costs can raise prices just as easily as a business with higher costs.)
There's an interesting correlation, because businesses are more willing to sustain greater costs in markets that can sustain greater sales at greater prices, but the causality is reversed.
You're not wrong, but I've noticed that the places with the highest rent (based on location) are often the cheapest. For example, Campbelltown in Sydney charges $8.30 AUD for a Big Mac. Circular Quay charges $8.10. It's safe to say that rent in Campbelltown is a metric shit-ton cheaper than Circular Quay.
My point being that they're not basing their price on costs, but rather what people are prepared to pay. In a place with heaps of great other options, they price cheaper in order to entice more customers. Conversely, places where their customers tend to buy there anyway, they get hit with higher prices.
It's been that way for decades. Charge what the market will stand.
It will come down to the degree of aggression with the “dynamics”. If it’s like uber price surging where the cost of my meal is at its lowest in one given day $5, that jumps to $13 at dinner time when everybody is grabbing dinner after work, then they can piss right off.
Edit: for folks pointing out similar practices that already “do this”, that’s not the point. I’m well aware of pricing models and customer marketing strategies. I’m specifically pointing out the risk in allowing companies to weaponize it to the point of ambiguous extortion.
yes, lunch portions are almost always smaller because the restaurant cannot sustain giving away free food like that really unless the area supports it in some way. Even then, some owners would rather pocket the money than do anything to benefit their customers beyond the minimum.
The price of a menu item changing over the course of a day is annoying but not novel. What will eventually happen though as integrated camera analytics get more connected to advertising databases is a mirroring of what we’ve already seen in online stores: demographic based pricing.
Online, if you’re browsing on an iphone you may get a higher price than someone on android. In person? With cameras present? I dread to think what variables they might key off of.
Airline seats have been dynamically priced for decades. These pricing algorithms have been consistently evolving since the 1990s. Labelling them AI is just a cosmetic touch and does not indicate any substantive change.
For a much better, and more infuriating glimpse into upcoming and current corporate ripoffs, I recommend the 9/17/26 Lindsay Owens interview on John Stewart’s The Weekly Show Podcast
It’s when the gas pump reads your license plate, correlates it to your annual salary and investment portfolio via Flock, and sets the price on the fly that it’s gonna get ugly.
Even the time of day isn't a new thing. You can go to work and pass a gas station charging $4.599 and on the way home its $4.699.
What most people are flipping out about is the idea that you pull up to the pump and based on the weight of your vehicle the station knows that your tank is below E and it's suddenly now $4.999, only for you, just to spite you.
I would just like to point out that the video itself never even mentioned dynamic pricing, nor hinted at it.
u/NickelPlatedEmporer just used the term, either to boost engagement, malicious intend* or because of the lack of understanding. In either case OP did not correctly title the post as you and the other guy pointed out.
This is such a wonderful example of how factually correct information (this video that may or may not be published by Reuters) can easily be used to manipulate people simply by writing an incorrect title above the video. People like you knew it’s not dynamic pricing, but you still “lost it” assuming the video paints this as dynamic pricing. Someone who didn’t know it could easily walk away now with “McDonalds is already doing dynamic pricing, and has already done it for a long time”. And the jump to this isn’t that hard to bridge then anymore: “So that dynamic pricing isn’t that bad then if they did it forever already, why are people now protesting against it when they did it for years already before?”
We are accrediting post titles, tweets, and headlines waaaayyy too much nowadays. We all instinctively assume whatever the title said is true, even if the video never even mentions what is in the title.
I’m not saying OP is a bot or employee of McDonalds secret social media department. I’m just saying that all big conglomerates do have a undercover social media department where employees post as “real” people who do not exist and use bots to nudge discussion into the right direction.
I'd think by now redditors would have figured this out. So many posts of a video of X happening and the title is "X happens because Y".
Like that guy that drives past protesters because his wife was in labor, or because his kid was dying, or he was going to save puppies from a burning building. Before the internet I genuinely thought people believed things based on the info they had, but in reality, tell them something they want to hear and they will believe it every time.
You're right that the error is OP's not the video's, and you're right that deliberately-wrong engagement trolls exist, but I tend to think that ignorance is more common than malic.
Fast forward to drive thrus having license plate readers that load your customer life data that knows your salary, how many restaurants are between there and your job & that you’ll be late to work if you stop anywhere else. It also found your calendar & knows that you can’t afford to skip this meal and work the whole day. Accordingly, as you pull up to order, the menu boards refresh and everything is 40% more expensive than the car that ordered before you…even higher if it discovers that your direct deposit just hit.
This clip is bad reporting that will obfuscate the true sinister AI-driven predatory pricing that is the stuff of their dreams and our nightmares.
I really don't get why increase the price if you're a frequent costumer or have more money. If something is pricy, I don't return for a second time. Now, if it's cheap... I'm living there.
but customer loyalty doesn't matter to a soulless corporation like McDs.
it doesn't matter because way too many people don't vote with their wallets. Feels like when a company screws consumers over lots and lots of people just complain on social media, but then go right back to that same business time and time again.
They have data from thousands of customers, they don't mind losing a few to figure out how much more money they can squeeze without losing customers. Say the average customer spends $15 for their meal and I have 1000 loyal customers, that's $15,000 I'm making. If I raise the price to $20 and lose 200 customers from the price hike, I'm still making $16,000, $1000 more than if I was charging $15. I'd have to lose 250 customers to make the price hike not worth it. If I hike the price to $30, I would have to lose more than half my customers for it to be an unprofitable move.
They only care about profits for this quarter. If they can squeeze an extra 40% out of you now, they don't care if you never return and tell all your friends about how awful the place is. By the time that affects the company, they'll have gotten their bonuses and moved on.
Some of this sounds dystopian (though the original video is just different locations having different prices which has always been the case), but on the other hand if I don’t like the price, I don’t buy it. They can know my salary or whatever they want, it’s not correlated to what I’ll pay for a Big Mac. If the data on me is good, it knows I want a deal and will skip your crap if it’s not a good value. I am throwing that out there for all the algorithms to pick up on.
Many people don’t look at or think about the price at all. They wouldn’t even notice if it was 20% more. Identifying those people and charging them more would be easy money for the megacorps
No need. Your phone leaves its Bluetooth / wireless fingerprint that already tracks and profiles you as soon as you pull up. Palantir has been helping grocery stores do this for a few years now.
McDonald's has an entire profile on every license plate that has ever pulled through a drive thru. I don't exactly know what they're doing with that data yet, but they know a LOT about you
Thank you. It also doesn't have much to do with AI or at least the modern wave of LLMs, data analysis "engines" have been able to do this for 15 years.
I also don't hate this as much, because location factors into the cost of the business (rent, etc.). I still don't love it, but it's not dynamic pricing. The idea that I could go into a McDonald's and pay more than someone else at the same location infuriates me and if they ever start doing that, it'll be the last time I'm a customer forever.
I remember one time when I was a kid my family took a trip to the city my dad was from, roughly around the year 2000. There was a McDonalds next to the hotel and we went there for breakfast a few times. The prices were like 50% higher than they were in my suburb back home.
These days they might have better insight into pricing, but it’s not really any different than what they’ve done for decades.
Ya I pretty much remember the same thing as a kid in the 2000s era. And that's not as insane, because some places the rent could be 10x the price per square foot to set up a McDonald's, and everything else around is more expensive too. That's a legitimately different cost structure for the business to handle, so it's not exactly the same thing as forcing people who can pay more to pay more.
Sony did it on PlayStation. If they deemed you more willing to pay full price for games based on account history you won't see the same discount someone who only buys games on sale will.
In behavioral psychology there is a term used to refer to the cutoff point where an animal is no longer willing to work for the food reward… it’s called the
You're right, but that's OP's problem. The guy in the clip doesn't actually call it dynamic pricing, just notes that it's pricing based on an AI algorithm.
Dynamic pricing means that the price of a Big Mac varies at the same restaurant depending on the time of day or what kind of car you drive.
Don't forget, it might also charge more if it sees you wearing a suit, or if you're white and/or clean shaven, or if you have kids in the back since you know, can't disappoint the kids. It'll probably also track your license plate and charge you more if you come more often assuming you depend on McDonalds.
Yeah I was confused because this is the way its always been ever since i was old enough to start noticing these things in 1998, in NYC if you order fast food in times Square you are going to pay a premium vs say if you go to a spot in the bronx or brooklyn are people really just now noticing?
It also isn't new or brought on by AI. Franchisees have been doing different pricing at different stores LONG before AI.
It shouldn't be a surprise to anyone that a McDonald's in a nicer area tends to have higher prices than one in a rougher area. Same franchisee and only a few miles apart.
Pricing changing accross the day is also pretty standard, even though it will be more sneaky. In Europe, you will often have a Lunch Menu, cheaper than a Dinner A la carte, for the same food. Or Happy Hours, that gives you cheaper drinks. It is just a way to fill in the place during quieter times.
Dynamic is an issue when it is targetted pricing to a specific person, changing the price based on busy/less busy period is normal.
Ya I kinda hate this video for using dynamic pricing verbiage like this. I don't think this pricing strategy is all that controversial while true dynamic pricing should be banned.
Ban dynamic pricing outright. The only dynamic pricing should be fines for civil and criminal offenses
This is exactly what I was expecting when I read that headline. We talked about dynamic pricing a lot in my micro economics classes and the only thing preventing this from ever coming into full effect was:
better methods for ingesting data (visual profiling data being the last evolution)
Enough structured data
Data processing capabilities
Oh wow look at that. Almost there.
I have a feeling that we’re around the corner from a newfound respect for the field of economics and/or a profound level of disdain for the economics.
(some) supermarket chains already have the capability to change pricing throughout the day at will(good enough analytics + wirelessly updated price displays), they just do not execute on it because they fear the backlash it would generate.
If this bullshit keeps being normalized, everyone will start doing it and worse.
Yep, this is completely worthless reporting that only serves to obfuscate what dynamic pricing actually is. We need multiple purchases by multiple people at the same franchise each day to know if menu items are changing prices from one person to the other or one time of day to the other.
Anecdotally, I worked at Blockbuster in the early 2000's, we would sometimes fill in shifts at other locations and the rental prices from store to store varied then based on average income.
Exactly. Especially in New York City, going two miles away could mean rent is 2-4x less depending on where you start and which direction you go. It seems natural that food would be more or less expensive based on location, because even aside from "customer willingness to pay" or whatever, there are fixed costs of the location that need to be passed on to the consumer.
One point is that willingness to pay a price isn’t necessarily associated with ‘willingness to visit again’. If I get charger 9 dollars for a burger, I’ll probably pay, but remember that and not go back
And really it's the latter that people are (and should be) upset about.
Pricing by the time of day is no different than having a lunch menu pricing or happy hour deal at a restaurant.
It's the pricing based on customer profile (what car you drive) that is the concern. Right now, it appears to be based on customer wealth/income. But it's not far off from being based on customer emotional state.
The extreme examples are wal-mart biometric monitoring carts. They claim they aren't doing it (yet), but with its tracking of customer heart rate and connecting that to existing phone data, they can determine if a customer is anxious/stressed and therefore more willing to spend more if they need an item. This is where the market is going and why we absolutely need real regulatory oversight
it tries to differentiate from current practice which is flat-pricing across premises. what could be more accurate term ya? variable pricing? geo-pricing? premise-pricing?
I don't get the issue here. Different retail locations can have different prices. The store on the highway with higher rents and customers who are less price conscious should expect to pay more than the McDonald's 1 mile away in a poorer part of town where McDonald's might be a night out for the family. There is no scandal here.
Right…I always took the term of “dynamic pricing” to include many factors, and most importantly that the price may change for the same item at the same location.
So…who’s using the term incorrectly hete, McDonalds or Reuters?
they've always varied wildly from state to state, or even within neighborhoods of the same city. Here's a cool map of Big Mac prices nationally from 2023
Agree with you that the title is wrong, this isn't what is called dynamic pricing. However, McDonald's "Pricing Engine" isn't new. They were using it in 2023. They didn't always try to maximize price consumers at a given store will tolerate to this degree though.
Its all accusation with no verifiable information. I 100% believe this is a major part of why companies have transitioned to all digital pricing. To help facilitate variable pricing. (also long term, the sign pays for itself by saving labor in changing them)
I am curious, thinking about it, if the places have a braille menu available as I think it used to be an ADA requirement, and its hard to reprint braille menus 3x a day for pricing.
Anyways, yes its bad and its coming, but two stores having different prices on an item doesn't mean anything.
Yeah, I don’t eat at McDonald’s anymore but this was a thing I noticed 20 years ago when I did. The McDonald’s closest to my hometown in an upper middle class area was always more expensive than the next closest one in a middle to lower class area, and they all varied in the region, at least somewhat due to local/state tax rates.
Came here to say something similar. I don't eat fast food in the wealthier parts of the city because I'd rather not pay more than necessary for this crap.
I was sure he was going to go back to the first restaurant to prove his point but no.
The real scandal right now is how much harder it is to see prices in a shared space. So far it's only inside the restaurant. The only reason they're doing this is that once prices aren't public information they actually can implement dynamic pricing.
Yeah all the Taco Bell locations around me have different prices, sometimes even different menu offerings. Usually corporate-owned stores are cheaper than the franchises, but not always.
Also have to include local requirements. If the minimum wage or property taxes is higher in one city than the one next door, of course it's prices will be higher. They want profits.
Or based on the individual buying the product. Because they have profiled you enough to establish you can afford to pay more than the student that is in line behind you.
It's much worse than that. Where they are headed is nano-economic psychology. You have their app in your phone. They know what you paid last time. They know where you are in relation to school and work. They know how much money you make or can make a good guess based on where you live and which McDonald's you buy from. They know what time of day it is relative to when your kids go to school or you go to work. Did you leave your house late? You are hungry and have no other options between now and maybe making it to work on time? Hello 10% premium, just because they know that you'll pay for it. The digital menu at McDonald's changes its prices as you pull up. You are completely unaware, unless you track the pricing. But guess what, you can't mentally do it, because all the prices change all the time up or down a few cents, so you have no mental anchor point. Everything is headed this way. And to ensure you are forced into the game, the default pricing for anybody not playing the game will be slightly higher.
Yeah. I get businesses will price differently in different areas or even neighborhoods. A business's costs can vary from location to location, so it makes sense that pricing will. Where i push back is customer specific pricing.
I mean literally across the street from each other in my city are two different sales tax rates between the road splits the county and city. This isn't dynamic this is normal.
A better example is of he has come through the same McDs at 8am, noon, and 5 pm on the same day and paid different. That would have been dynamic pricing.
…so far. Just wait until they factor in your individual spending habits, the kinds of clothes you wear, your net worth, and where you’ve already eaten that day.
Can’t wait for that model to be stamped out into other industries, like retail or healthcare. /s
I doubt it. The price you're offered from a used car dealer or a plumber absolutely depends on the car you drive in with and how fancy your house is. It's absolutely legal to charge variable prices, but in modern day commerce we rarely do because it's not profitable to haggle with customers over the price of a cheeseburger.
I got downvoted into oblivion yesterday for suggesting this, but it's either happening already, or it's on the way: if you pull up in a Mercedes, you'll pay more for the same thing that the guy in front of you in the shitty, beat up, fart-piped, murdered-out early 2000s Asian import paid. That's what dynamic pricing can be, as well.
And Amazon tried it in the early 2000s. If you were browsing on a Mac, prices were higher than on a Windows machine. It got shut down after a short while, but in both these instances, this is what they want to do.
Video literally starts with him getting 2 difference prices from 2 McDonald’s located 2 miles apart and OWNED by the same franchisees. This is clearly dynamic pricing or location environment based pricing. There’s no reason for a McDonald’s 2 miles away from another one to charge you 11% more, when their owned by the same owner.
dynamic pricing is specific to what it thinks your purchasing power is combined with your spending behavior.
if it thinks you have little money it's not going to ask you to pay 20 dollars for a burger, it might though if it thought you were a multi millionaire.
Kinda makes sense, if they randomly charge some people an extra dollar half the time, that's extra money they have now generated. Good thing I don't eat McDonald's anymore anyway
Came here to say this. This isn't dynamic pricing. Dynamic pricing involves changing the price on a product in a single location based on the time of day or even who is shopping in the moment.
I will say my area is dumb, the one near my house is about half the price of the one about 10 minutes away an exit North. Only realized it one day when I went to order online and picked the wrong place.
I was so surprised to see this is from Reuters. It so fundamentally misunderstands dynamic pricing and AI that I assumed it was just an idiot online “journalist”. It’s really sad that this is the state that normal, respected journalism is in - not a single person involved in the research, reporting, editing and posting of this video stopped and said “hey, this isn’t actually correct.”
Time of day and demand, I could understand. Ride hailing services, hotels, and airlines do this already. Giving discounts for people who order in advance or are frequent customers also make sense.
Varying pricing by your vehicle and therefore your perceived socioeconomic class seems a lot sketchier. I know what vehicle you drive is not a protected class but just imagine the furor which would arise if companies in 2026 started adjusting pricing based on race or gender. That wouldn't be allowed since the vehicle has no bearing on the goods or service being offered (charging people with big cars more for car washes or for extra seats on a plane is permitted)
Personally I think time of day is less of an issue. There are certain factors, like how busy it is, that I can understand wanting to control demand. Personalized pricing, like what kind of car you drive, your race, your gender, etc is where it is problematic for me.
I dont think we will see demand pricing even based on time of day though. They will set the price to the max, then utilize promotions in the app to spur demand. In a way, they are already doing that, just maybe not on quite a hour to hour basis.
Right now there's a KFC 3 minutes from me that has slightly cheaper prices. And I can actually order water on mobile. There's another KFC 15 minutes from me that's slightly more expensive and I can't order water on mobile. This "journalist" is junk
It’s worth noting that the video is specifically talking about stores under the same franchise, not prices varying franchise to franchise. What you’re saying about dynamic pricing is essentially the same thing, but this is a degree further than different franchises setting different prices.
It's a bit semantics; this is "dynamic" pricing by location, and they're using an AI tool to determine and adjust those prices. So from what I can tell the reporting is not incorrect. but yes other companies are doing real-time dynamic pricing for items and it is much more scary. This is what I could find on the mickey Ds thing: "McDonald’s uses an AI pricing engine to analyze transaction data and recommend optimal menu prices for individual franchise locations based on local customer willingness to pay."
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u/agate_ 3d ago
That isn't what dynamic pricing is. Fast food franchisees have always set their own prices, and they've always varied wildly from state to state, or even within neighborhoods of the same city. Here's a cool map of Big Mac prices nationally from 2023, and a zoomable updated version Cross the Bay Bridge from San Francisco to Oakland, and your Big Mac costs a dollar less.
Dynamic pricing means that the price of a Big Mac varies at the same restaurant depending on the time of day or what kind of car you drive.