A federal antitrust lawsuit filed this week accuses McDonald's of using an AI-powered “pricing engine” to set menu prices across U.S. locations and overcharge customers for Big Macs and fries. McDonald's denies the allegation. The company says it doesn't use AI to determine what individual customers will pay, and that it gives franchisees “tools, resources, research and recommendations to help them make informed decisions.”
The case arrives as AI spreads quietly through places where people buy food. And the people most exposed to pricing experiments can least afford to absorb them.
Technology at the Checkout
Kroger said earlier this year that it uses an AI platform called FlashFood to mark down perishables nearing the end of their shelf life and market them to shoppers through an app. Electronic shelf labels, which display prices on digital screens, are becoming more common at Kroger, Amazon Fresh, Walmart and Whole Foods, as well as at U.K. supermarkets Tesco, Morrisons and Asda. Revolut recently trialed facial-recognition checkout in select coffee shops, allowing customers to pay with a glance. Amazon Fresh, Whole Foods, Tesco, Morrisons, Asda and Revolut didn't immediately respond to CNBC's requests for comment on AI use.
On Wednesday, Sainsbury's released SmartLists, an AI feature that helps customers build shopping lists and find products by uploading pictures or typing in meal ideas.
Experts warn that the same tools could fuel more dynamic pricing: frequent, rapid price changes in real time. “Dynamic pricing means changing prices in response to changing market conditions, such as demand, timing, capacity or competitors' prices,” said Miroslava Marinova, a senior lecturer of commercial law at the University of East London. “It isn't new. Airlines, hotels, and ride-hailing services have used it for years.”
When Prices Get Personal
The concern is where that logic leads. Bank of England economists Clare Lombardelli and Rupal Patel said in April that more sophisticated technology is making prices change more often and become more individualized. Firms could charge “as close to the maximum price a consumer is willing to pay for a good or service,” they wrote, describing the practice as “perfect price discrimination.”
Marinova said electronic shelf labels and facial-recognition checkout expand the information companies can collect, including transaction histories, browsing behavior, location and purchasing patterns. “The traditional distinction between dynamic and personalised pricing is becoming less clear in practice,” she said. “Dynamic pricing responds primarily to market conditions, whereas personalised pricing uses information about the consumer to estimate willingness to pay.” As retailers combine market-level information with detailed consumer data, she added, “the boundary between dynamic and personalised pricing becomes thinner.”
Marinova acknowledged that dynamic and personalized pricing aren't automatically harmful. They can offer discounts to some consumers, making certain products and services more accessible. But she warned about the downside. “That makes it much harder to compare prices and to know whether another consumer is being offered a different price for the same product,” she said. “If consumers cannot understand why they received a particular price, cannot compare it with prices offered to others, and cannot effectively switch to another supplier, the normal disciplining effect of consumer choice becomes weaker.”
A Statistical Blind Spot
The Bank of England economists said the shift could also scramble the way inflation is measured. The consumer price index relies on a representative sample of prices. “That works well when prices mostly move slowly and uniformly. But when prices shift continually – and differently for each shopper – the idea of a ‘representative’ price becomes strained,” they said. Personalized pricing “splinters the consumer experience,” leaving households with increasingly different inflation rates. “And when prices differ for the same thing, inflation becomes even more personalised – and aggregate measures may no longer reflect households' experience.”
Retailers and Regulators Respond
Walmart and Kroger have said in recent years that they don't use dynamic or surge pricing to set individualized prices for customers, and that they use tools to streamline operations instead. Several states are taking action. New York requires most businesses that use customers' personal data to set prices to disclose that use clearly. Maryland has restricted food retailers and delivery services from using personalized, data-driven pricing to charge higher prices for certain food. New Jersey and Connecticut have enacted measures targeting “surveillance pricing.”
Why This Matters:
Groceries aren't a luxury purchase. Families can't skip them, and they can't always shop around. If a price reflects what a company has learned about one household's habits rather than what the market will bear, shoppers have no easy way to know. Marinova's warning about weakened consumer choice goes to the heart of how markets are supposed to protect buyers. The Bank of England economists add another concern: if inflation hits households differently, official statistics may miss the squeeze many families feel. State laws in New York, Maryland, New Jersey and Connecticut show lawmakers are starting to treat transparency and limits on data-driven pricing as consumer protection, not red tape. Whether those rules keep pace with the technology remains an open question.