On October 2, 2026, a customer from DeKalb, Illinois, asked a federal court in Chicago to treat McDonald's internal pricing software as the machinery of an agreement among supposedly rival restaurants. Michael Thomas alleges in his complaint that McDonald's USA, LLC and McDonald's Corporation gather nonpublic sales data from company-run and franchised outlets, process it in a machine-learning system, and press franchisees to follow what comes out.

In Short

A McDonald's customer in Illinois has sued the company, saying its price-recommendation software lets restaurants that are meant to compete on price quietly coordinate instead. The case matters because a court is being asked whether feeding everyone's sales figures into one shared tool is the same thing as rivals agreeing on prices, and the suit seeks to speak for everyone who bought food at any of the chain's US restaurants. For now nothing changes at the counter: the filing holds only allegations, McDonald's says franchisees set their own prices, and no court has ruled on any of it.

The filing

The case is Thomas v. McDonald's USA, LLC, number 1:26-cv-12149, lodged on October 2, 2026, in the Eastern Division of the US District Court for the Northern District of Illinois. Derek Y. Brandt of Clarkson Law Firm, P.C. signed the 31-page document in Chicago, and a second lawyer from the firm, Larkin Turner, is listed in Washington with an application to appear pro hac vice still to be submitted. According to CourtListener, the case has been assigned to Judge Thomas M. Durkin.

Thomas lives in DeKalb, Illinois, according to the complaint. He is described as a frequent customer who "works hard to be price-conscious", typically orders a Quarter Pounder with cheese, fries and a Coke, and sometimes goes to a restaurant with his wife for breakfast on Sunday mornings. He has noticed, the filing says, that prices for the same items differ between stores near his home.

The proposed class

The complaint defines a nationwide class as "All persons in the United States who purchased menu items at all McDonald's restaurants whether operated by McDonald's itself or by a McDonald's Franchisee", and adds an Illinois subclass of residents who bought at restaurants in the state. Its numerosity paragraph puts the US restaurant count at approximately 14,000 and asserts that class members number in the millions. Defendants, their affiliates, officers and directors, and the assigned judges are excluded.

One gap stands out. The complaint refers to a "class period" in several places, yet neither class definition carries a start or end date. The conspiracy itself is dated to "no later than 2019".

Four counts

Count I rests on Section 1 of the Sherman Act and alleges a continuing agreement among the defendants and co-conspirators "to fix, raise, maintain, and stabilize" the cost of food at the counter by pricing through common software built on pooled competitor data. Count II reframes the same conduct as an unlawful exchange of competitively sensitive information, describing the data exchange as "the mechanism through which Defendants and their co-conspirators fixed prices". Count III invokes the Illinois Antitrust Act (740 ILCS 10/1) for the state subclass, and Count IV the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1).

The relief sought includes treble damages and attorneys' fees under Sections 4 and 16 of the Clayton Act, a permanent injunction, restitution and disgorgement, and a jury trial. No dollar figure appears; damages are to be set "according to proof".

How the pricing engine works, according to the complaint

The center of the filing is what it calls a centralized, machine-learning "pricing engine". Since at least 2019, the complaint alleges, McDonald's has owned and operated a system that ingests data from millions of daily transactions at corporate and franchised restaurants, franchisees' confidential sales included, and returns a recommended price for each menu item at each location. Much of the detail is pleaded on information and belief and sourced to a Reuters article of September 29, 2026, which the complaint also cites for its claim that the tool's use was not widely known before that date.

The complaint describes an algorithmic pricing engine that does more than cover costs. Per the filing, it estimates how much each restaurant's likely customers will pay, tells operators how price-sensitive those customers are, and uses the nonpublic data of competing McDonald's restaurants to do so.

Data inputs

Paragraph 50 quotes the Franchise Disclosure Document, which requires each restaurant to run a proprietary point-of-sale system owned by McDonald's. Transaction-level information - sales, transactions and product mix - is stored on the franchisee's server hardware and transmitted to McDonald's, which has "independent access" to it, with "no contractual limits" on that right. Mobile app orders follow the same route, according to the complaint, and franchisees also submit monthly profit and loss statements. They cannot disclose their sales data to anyone else without McDonald's approval. From these facts the complaint concludes that McDonald's is "the only channel through which one franchisee's data can inform a rival's price".

The same document lists an annual fee for the "Pricing Engine". McDonald's marks it optional, the complaint says, but franchisees are in practice expected to use it.

The 30% rule

According to Reuters, as relayed in the complaint, the engine recommends increases on items that have gone at least two years without one, and on items whose price has recently risen in at least 30 percent of stores. That second condition is the 30% rule. The engine also leaves ice cream and drinks out of increases during summer months. McDonald's controlled the engine's rules and corporate targets, the complaint says, the 30% rule included.

The complaint states the consequence plainly: whether a franchisee is told to raise a price depends on whether its competitors already did. The same reporting says the tool measures "customer willingness to pay in your area" and warns franchisees whose prices are too low with messages such as "Your restaurant is showing MEDIUM SENSITIVITY to Price."

The portal's terms of service tell users they "may be competitors of each other" and must follow antitrust law, Reuters reports, according to the complaint. William Kovacic, a former FTC commissioner, told Reuters that the wording was "an acknowledgment there's a potential problem".

Company-operated restaurants, known as McOpCos, also follow the tool, the complaint says, and use nonpublic franchisee data to set their own prices while competing with those franchisees.

Who built it

The complaint ties the system to a 2019 purchase. McDonald's acquired the artificial intelligence company Dynamic Yield that year for $300 million, a deal Restaurant Dive named the "deal of the year" according to the filing. The complaint does not say which part of the pricing system, if any, Dynamic Yield supplies. Third parties "reportedly including Deloitte and Tiger Analytics" helped design and implement the platform, and sources told Reuters that Tiger Analytics runs the tool while McDonald's controls it.

Investor Day statements

At the company's Investor Day on September 23, 2026, executives described the system in public, according to the complaint. Global chief marketing officer Morgan Flatley called the "menu pricing engine" an "industry-leading tool" delivering "pricing recommendations down to the restaurant and item level". Brian Rice, another executive, said the tool is "only as good as the data feeding it" and described a "standard restaurant data lake" capturing "billions of data points daily". The complaint treats both remarks as public admissions that McDonald's uses the tool to set pricing.

Pressure on franchisees

For the theory to hold, franchisees must be unable to ignore the recommendations freely, and the complaint spends considerable space on that point. About 95 percent of McDonald's US restaurants are franchised, it says, mostly under a standard 20-year license. McDonald's collects a 4-5% royalty on franchisee revenue, mandatory advertising contributions that also track revenue, and real estate rent. Franchisees pay a $45,000 initial fee and make initial investments the company estimates at up to or above $1,000,000. Their agreements state that they "have no right to renew or extend", and eligibility to renew or grow depends on meeting National Franchising Standards assessed at periodic business reviews.

Since January 2026, the complaint says, McDonald's "holistically assess[es]" franchisees' menu pricing and expects them to be "constructively engaging with McDonald's approved Pricing Consultant and Tools", a requirement it traces to a CNBC report of December 8, 2025. Reuters, as quoted in the filing, reports that McDonald's "records franchisees' deviations from the recommendations" in detail. The complaint adds that the company tells investors that pricing non-compliance factors into decisions on renewal or expansion.

An earnings call on August 4, 2026 supplies the sharpest passage. CEO Chris Kempczinski implied, according to the complaint, that conversations with franchisees who deviate from recommended pricing would take place during business reviews and in renewal and growth discussions. It is "kind of obvious what should happen out of that", he said, adding that those conversations "will be the things that get this fixed". Of operators not complying, he said, "their business results are a lot softer".

An earlier instance comes from the Michell litigation. In February 2024, the complaint says, McDonald's executive Jeff Roth allegedly faulted franchisee George Michell for "not utilizing industry-standard advisors when setting his retail prices".

What McDonald's has said

The company's public position, set out in paragraphs 41 to 44 of the complaint, is that franchisees decide. On May 29, 2024, Joe Erlinger, president of McDonald's USA, wrote in an open letter that franchisees "set menu prices for their restaurants". The company's 10-Q for the period ended March 31, 2026, quoted in the filing, describes franchising as a way for owners to "maintain control over" pricing decisions and says pricing strategies are developed "in collaboration with franchisees". At the September 23 Investor Day, Flatley said franchisees "retain control over independent pricing decisions". The complaint also notes that menu pricing is not among the brand standards of Quality, Service, and Cleanliness that franchisees contract to meet.

McDonald's answered the lawsuit through a statement to Newsweek, published October 6, 2026. According to Newsweek, McDonald's USA said it strongly rejects the allegations, that franchisees keep full authority over what they charge, that its tools provide recommendations reflecting local conditions, and that it does not use dynamic pricing or change prices in real time. Newsweek also describes an October 1 company statement that called media reports on the subject inaccurate.

The complaint turns the independence claim into a pillar of its own argument. "Each franchise is an independently owned and independently managed business", it says, and the standard agreement carries a clause headed "Franchisee Not an Agent of McDonald's". The franchise disclosure document states that a franchisee "will not receive an exclusive territory", and the complaint quotes a McDonald's comment to the FTC that the company does not grant territorial exclusivity because it incentivizes franchisees to maintain high-quality restaurants. The conclusion drawn is that McDonald's restaurants "compete with each other by design", which is what would make an agreement on price an agreement between competitors.

The price record

The complaint's factual spine is a record of rising prices. McDonald's own fact sheet of May 29, 2024, cited in paragraphs 12 and 69, states that average prices rose approximately 40 percent between 2019 and 2024, a span the complaint says matches the period of the tool's deployment. The company told consumers the increase reflected costs. The filing offers no estimate of how much of the rise the engine explains.

Other figures come from annual reports. Paragraph 70, citing the 10-K for fiscal 2019, says sales rose 5 percent that year while guest counts fell 1.9 percent. The fiscal 2022 and 2023 10-Ks, the complaint adds, credit "strategic menu price increases" as a driver of profits. At the Investor Day, Chief Financial Officer Ian Borden told investors that "capabilities such as AI-enabled revenue management" would "help increase average check over time", and Kempczinski spoke of "deploying AI enabled tools at scale" to "strengthen restaurant economics and unlock restaurant level efficiency".

The $18 Big Mac meal

The filing's origin story is a viral social media post from July 2023 showing an $18 Big Mac meal at a restaurant in Darien, Connecticut, which the New York Post covered on July 19, 2023. The franchisee there, George Michell, sued in the Eastern District of New York on May 9, 2024, alleging that the meal's pricing was recommended by "industry standard advisors", a phrase the complaint reads, on information and belief, as a reference to the pricing tool. After the suit, Erlinger's open letter of May 29, 2024 called the $18 meal the exception, attributed rising prices to inflation and repeated that franchisees set their own prices. The Michell case remains open, according to CourtListener.

The complaint pleads the arrangement as a horizontal agreement "orchestrated by McDonald's" and unlawful per se, a category courts condemn without a detailed inquiry into market power. If that label holds, the plaintiff says, no relevant market needs defining. In the alternative it asks for a "quick look" analysis and, for the Illinois claims, the rule of reason. It argues that any legitimate aim could be met through "pricing tools that do not pool franchisees' confidential data, do not condition price increases on other stores' increases, and do not tie compliance to franchise standing".

For authority it turns to a March 26, 2025 Statement of Interest filed by the US Department of Justice in the same district, In re Multiplan Health Insurance Prov. Litig. (case 1:24-cv-06795). The complaint quotes the department as saying that "any formula used to fix benchmark, component, recommended, or 'starting point' prices" can violate the Sherman Act even where end prices ultimately vary, and that "sharing information through an algorithm provider can create the same anticompetitive effects as a direct exchange between competitors". The second passage cites Duffy v. Yardi Systems, Inc., a Western District of Washington decision of December 4, 2024.

The pleading leaves several questions open. Franchisees are formally separate businesses, so a court will have to decide whether they and the company can be treated as competitors who agreed to price through one tool. It will also have to decide whether recommendations that franchisees may in theory reject amount to an agreement, a point on which the complaint relies on its account of tracking, renewal decisions and the fee McDonald's labels optional. None of this has been tested; the case is in its first week.

Inconsistencies in the filing

The document contains several internal discrepancies that bear on how its claims can be read.

  • Investor Day date. Paragraphs 44, 53, 68 and 74 place the event on September 23, 2026, while footnotes 8 and 13 cite the recording as "Investor Day 2026 (Sept. 24, 2026)". PPC Land's report on the event also gave September 23.
  • Executive's name. The global chief marketing officer is "Flatley" in paragraph 44 and "Flattley" in paragraph 53.
  • FTC comment date. The text of paragraph 38 dates McDonald's comment to the FTC to 2023, while footnote 1 cites a letter dated October 24, 2024.
  • Class period. Referred to repeatedly, defined nowhere.
  • Sourcing. Large parts of the engine's description are attributed to "recent public reporting" and pleaded on information and belief rather than drawn from documents the plaintiff holds.

Why the filing matters to the marketing community

Pricing sits beside advertising in the marketing mix, and the legal ground beneath it has been moving. In August 2026 the FTC voted 2-0 to propose a non-binding enforcement policy statement treating the setting of prices from personal data without clear disclosure as likely unfair or deceptive under Section 5 of the FTC Act, with a 30-day comment period to follow publication in the Federal Register. That proposal concerns prices tailored to individuals, a different theory from the McDonald's complaint, which deals with restaurant-level recommendations and coordination among separate operators. McDonald's told Newsweek its tools do not tailor prices to individual customers. Both threads, however, test what pooled data may lawfully be used for. The FTC had ordered eight companies in July 2024, among them Mastercard, JPMorgan Chase, Accenture and McKinsey & Co., to hand over information on surveillance pricing products under its Section 6(b) authority.

Section 1 of the Sherman Act, the statute at the heart of the complaint, has also reached advertising directly. On April 15, 2026, the FTC and eight states sued WPP, Publicis and Dentsu in the Northern District of Texas over shared brand-safety standards, with the defendants agreeing to a proposed consent order. Elsewhere, California's attorney general put per se price-fixing allegations against Amazon into the public record in April 2026, and Germany's Bundeskartellamt barred Amazon on February 5, 2026 from algorithmic price controls on third-party sellers on amazon.de, ordering EUR 58.8 million in disgorgement. The legal bases differ, state law in one case and abuse-of-dominance rules in the other, but each looks at software that influences prices set by other parties.

The data side of the story overlaps with advertising. At the same Investor Day, McDonald's disclosed a pilot of third-party ads on digital order screens at 450 company-operated restaurants, roughly 3% of its US locations, with a long-term goal of a $1 billion media business. The complaint does not mention the advertising network. It does quote the "billions of data points daily" figure that executives used for the restaurant data lake, so one data asset appears in a pricing lawsuit and in an advertising plan announced at the same event. The complaint also notes that franchisee advertising contributions are tied to revenue, so higher revenue enlarges both the royalty line and the pool that funds marketing. The complaint gives the global footprint as approximately 45,356 outlets serving about 69 million customers daily; PPC Land's report on the investor day cited more than 46,000 restaurants, a difference that likely reflects date and definition, though neither document explains it.

Franchisor-mandated technology is also being tested elsewhere. A Pizza Hut franchisee with about 111 locations sued Pizza Hut LLC on May 6, 2026 in the Business Court of Texas, seeking at least $100 million over an AI dispatch system it says the franchisor mandated. The two cases involve different claims, but both ask what happens when a franchisor's data-driven system meets the legal independence of franchisees.

The next steps are procedural: service on the defendants, then their response to a complaint that demands a jury trial.

Timeline

Summary

Who: Michael Thomas, a customer from DeKalb, Illinois, represented by Clarkson Law Firm, P.C., suing McDonald's USA, LLC and McDonald's Corporation on behalf of a proposed nationwide class and an Illinois subclass.

What: A complaint alleging that McDonald's and its franchisees agreed to set prices through a shared machine-learning pricing engine fed with pooled, nonpublic sales data, in violation of Section 1 of the Sherman Act, the Illinois Antitrust Act and the Illinois Consumer Fraud and Deceptive Business Practices Act. It seeks treble damages, an injunction, restitution and a jury trial.

When: Filed October 2, 2026, covering conduct alleged from no later than 2019 to the present.

Where: The US District Court for the Northern District of Illinois, Eastern Division, Chicago, case 1:26-cv-12149, assigned to Judge Thomas M. Durkin.

Why: The plaintiff says the engine's data pooling, its 30% rule and the enforcement of compliance through renewal decisions replaced independent pricing, and points to an average menu price rise of approximately 40 percent between 2019 and 2024. McDonald's says franchisees set prices and that its tools only recommend; the allegations have not been tested in court.