McDonald’s finds itself embroiled in a federal lawsuit alleging that its AI-augmented pricing instrument contravenes antitrust legislation, inasmuch as it disseminates nonpublic data to franchisees who may well be vying with one another within the same market.

The lawsuit, filed Friday in Illinois, alleged that McDonald’s pricing tool employs artificial intelligence to amass data that competing franchises would not ordinarily divulge, such as store-level sales.

The Chicago-based burger behemoth has maintained that it proffers the tool to U.S. franchisees to assist them in setting prices at their individual restaurants.

The lawsuit further imputes to the pricing system the escalation of McDonald’s prices across the United States.

“McDonald’s has constructed and for years operated its proprietary information-sharing pricing apparatus, one that draws upon data gleaned from its millions of daily transactions to calibrate menu prices across thousands of U.S. restaurants,” the lawsuit states.

“The upshot is algorithmic price-fixing directed at customers who are already stretched thin.”

McDonald’s asserted on Tuesday that the lawsuit is “filled with inaccuracies” and that it would vigorously defend itself.

"AI does not set menu prices at McDonald's restaurants – McDonald's franchisees do," the company said in a statement.

"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."

The lawsuit was instituted on behalf of a consumer, Michael Thomas, of DeKalb, Illinois.

According to the complaint, Thomas is a frequent patron of McDonald's, where he customarily orders a Quarter Pounder with cheese, french fries and a Coke.

The lawsuit alleged that Thomas had observed discrepancies in pricing among the McDonald's outlets in proximity to his residence.

McDonald’s has affirmed that it has availed itself of an AI-enhanced pricing instrument for upward of a decade.

The program ascertains the optimal price for menu items predicated upon a store’s sales, location and sundry other determinants, competitors’ prices among them.

McDonald’s asserted that well before it embraced the AI-enhanced instrument, it had been amassing data and furnishing recommended prices to its franchisees, who own and operate 95% of McDonald’s 14,000 U.S. stores.

"What we do, in essence, is furnish the context of what is transpiring," a McDonald's spokesman said.

"We possess no means whatsoever of influencing the menu pricing in a restaurant."

Yet the lawsuit asserted that McDonald’s wields “significant leverage over its franchisees,” enabling it to bring pressure to bear on them to comply with its pricing recommendations.

On Tuesday, reporters left a message with the National Owners Association, the entity that represents McDonald's franchisees.

For several years now, McDonald’s has been trialling an array of value-oriented strategies across the U.S. and other markets, endeavouring to woo back lower-income consumers, whose patronage of fast-food chains has dwindled.

Yet franchisees do not invariably adhere to its guidance.

During an August conference call with investors, McDonald’s Chairman and CEO Chris Kempczinski observed that a mere 60% of its U.S. restaurants were proffering McDonald’s proposed menu of 10 items priced under $3.

"As you are doubtless cognizant, within the framework of our system, that is not something we merely flip the switch on," Kempczinski said.

"It necessitates conversations with franchisees."

The lawsuit petitions the judge to certify the matter as a class action and to compel McDonald’s to disburse damages to the class.

It further seeks to enjoin McDonald’s from enforcing agreements that curtail competition.