In the evening news roundup for October 2, there was a story easy to scroll past between sanctions and missile launches: Reuters broke down how McDonald’s sets prices. The point of the story was not that prices are rising—it was the mechanism. A machine model, trained on millions of daily transactions across nearly 14,000 restaurants, gives each restaurant owner a recommendation for every item on the menu—from a Big Mac to discounted coffee for seniors. In the franchisee interface, screenshots of which the reporter saw, there is a line: “Your restaurant displays AVERAGE PRICE SENSITIVITY.” Below it, an explanation of what that sensitivity is based on: “the willingness of customers to pay in your area.”
Prices at individual locations had been calculated before. What got me was the juxtaposition. The Big Mac is the only sandwich in the world that has spent forty years functioning as a measuring instrument: since 1986, The Economist has used its price to compare the currencies of different countries. Millions of people who have never opened an economics textbook know about the “Big Mac Index.” And at the very moment this sandwich had finally cemented itself as a ruler, they started moving it from within: the price at every location began to be calculated separately, for a particular neighborhood and a particular evening.
It makes for a strange construction. An instrument that measured the world for forty years turned out also to be a commodity whose price is set by a model. A ruler that rewrites itself. I wanted to understand what was happening to both roles—and whether the second had fallen apart along with the first.
In the autumn of 1986, The Economist’s economics editor Pam Woodall was sitting at home, thinking about how to explain purchasing-power parity to readers—the idea Swedish economist Gustav Cassel had formulated back during the First World War: money is worth what it can buy, and the exchange rate between two currencies should reflect exactly that.
The problem was proving it. To compare the purchasing power of two countries, you need to take the same basket of goods. For its calculations, the OECD collects more than three thousand consumer goods and services, thirty public-sector professions, two hundred types of equipment, and a dozen and a half construction projects; the European Union keeps a list of more than two thousand items. In the early years, European statisticians, according to The Economist, spent half a day arguing about how many varieties of strawberry jam existed in Europe.
Woodall proposed replacing the basket with a single item that was available everywhere and “tasted roughly the same.” She herself calls it a bath-time epiphany. The first index came out in September 1986: the French franc was found to be 73% overvalued, the Brazilian currency 87% undervalued. The article was meant as a one-off joke.
Instead, the opposite happened. By 2023, more than fifty academic papers had been written about the index, it had over three thousand citations in Google Scholar, and it had made its way into textbooks. Variations appeared: Starbucks’ latte index (2004), Bloomberg’s “Billy Index” based on IKEA bookcases, indices based on iPods and iPhones. In 1991, the Union Bank of Switzerland calculated, using the Big Mac, how long a worker had to work to earn a burger and fries. The very first attempt of this kind, it later emerged, had been made by Forbes columnist Howard Banks back in 1984—two years before The Economist, and with none of the fame.
All of recent history passed through the index: West Germany, Yugoslavia, the Soviet Union (in 1990, after McDonald’s opened on Pushkin Square—more than 30,000 visitors on the first day, a six-hour line; The Economist’s report ran under the headline “Fast Food Comes Slowly to Moscow”). In 1992, the USSR was replaced by Russia, and thirty years later it vanished too. In July 2021, a Big Mac in Venezuela cost 16.02 million bolívars—the biggest number in the history of the index.
That simplicity comes at a price, and The Economist says so honestly. A Big Mac costs different amounts not only because currencies differ. In Switzerland, the law requires restaurants to state the origin of their meat—in a Basel location, the beef in the Big Mac turned out to be a Swiss-Austrian blend, and that is already a different cost base.
In some countries, the Big Mac is familiar food; in others, it is an exotic item and a status marker. There is no theoretical reason why non-tradable costs such as rent should be the same in New York and Beijing. Wikipedia adds that the price of a burger also reflects “what the local market will bear”: in some places, the model is high volume and low margin; elsewhere, the reverse. Argentine outlets, for instance, sold the burger more cheaply than anyone else because that was better for the country as a whole, not for the register.
The geography is patchy too. McDonald’s exists in only four African countries; for the rest of the continent, they had to invent a separate “KFC Index” based on a fifteen-piece bucket. Burger calories and weight differ from country to country: an Australian Big Mac has 22% fewer calories than a Canadian one and is 8% lighter than a Mexican one. In India, there are no beef burgers at all—the index substitutes the chicken Maharaja Mac for the Big Mac.
And yet the index’s main failure turned out to be political, and it happened in Argentina. In January 2011, The Economist published a chart showing that the gap between burger inflation (19%) and official inflation (10%) in Argentina was bigger than in any other country in the world—which meant the government was “fiddling the figures.”
The press immediately noticed oddities at more than two hundred Argentine restaurants in the chain: Big Macs were no longer advertised and were being sold unusually cheaply. Reports said that Trade Minister Guillermo Moreno had forced McDonald’s to keep the price artificially low—precisely for the country’s standing in a foreign newspaper. In June 2012, the price of a combo suddenly rose 26%, closer to the rest of the menu. The full title of The New York Times piece about the episode was “Argentina’s Big Mac Attack,” and there is not a drop of irony in it.
It is worth saying separately what this did to the ruler itself. In the summer of 2022, The Economist changed its methodology: it had previously averaged the American price across four major cities; now McDonald’s simply sends it the figure. In other words, the baseline for the entire global index is a number supplied by the company whose pricing we are now examining.
Back to the engine. According to Reuters, it assesses “willingness to pay” at a specific restaurant, not an average across the country. Five restaurant owners told the reporter that the corporation was pressuring them to use the tool. Since January 2026, McDonald’s has required franchisees, under its new business standards, to “constructively engage with McDonald’s-approved pricing advisor and tools,” while a June document meticulously tracks deviations from recommendations—internally, this is called pricing non-compliance.
The pricing logic is configured from outside. The platform is run by contractor Tiger Analytics, and two of its former employees described to Reuters how McDonald’s gives the company rules and corporate targets: raise prices only on items that have not gone up for at least two years; raise a price only where it has already been raised at a minimum of 30% of locations; leave ice cream and drinks alone in summer. That last point is not about greed, but about the fact that ice cream and Coke sell themselves in summer anyway.
The economics of the conflict are simple and almost comical. The corporation earns mainly a percentage of restaurant revenue, not their profit. That means headquarters is interested in low prices and a big crowd, while franchisees are interested in high margins, because their own spending on wages and rent has risen 36% since 2019. In recent months, the engine has been pushing prices down, in some places even cutting them—and that has already created friction with restaurant owners. The result is not obvious: despite all the “affordability,” traffic at the chain’s U.S. restaurants was falling year over year in every full month beginning in March.
Twenty operators surveyed by Kalinowski Equity Research in January gave their relationship with the corporation an average score of 1.37 on a five-point scale (it was 1.71 in October 2025). Asked whether they supported the new franchise standards, every last one said “no”—the first time in more than twenty years of the survey that every answer to a yes-or-no question had matched. An independent owners’ association adopted a document called the “Franchisee Bill of Rights,” whose final item is “the right to set prices without fear of consequences”: without intimidation and without threats to cut support from the parent company.
What this arithmetic means in practice is shown by a story that began with a screenshot.
In 2024, a screenshot went viral online: a Big Mac combo for $18. McDonald’s responded with an open letter from Joe Erlinger, president of its U.S. division—and, in defending itself, pinned down the specifics. The average price of a Big Mac in the United States at that point, according to the company, was $5.29, meaning it had risen 21% since 2019, not doubled, as “poorly sourced” reports claimed.
The chain’s profit over the same period rose by almost a third: gross profit, from $11.18 billion in 2019 to $14.56 billion in 2023. That $18 burger was sold in the town of Darien, Connecticut, where median household income exceeds $250,000 a year.
By 2026, twelve dollars had gone from horror story to normal. According to The Economist, the average American price of a Big Mac went from $4.71 in January 2019 to $6.22 in the summer of 2026: a 32% increase. The 21% McDonald’s wrote about in 2024 was true at precisely that moment. Another ten piled on over the next two years.
Behind that number lies the second role that gets lost in arguments about “greed.” By August 2026, Kempczinski, at a meeting with investors, named the owners who were not complying with the corporate benchmark for menu items priced below $3—there were about a third of all franchisees. The “$5.29” from a letter two years ago and the “three dollars” from the new benchmark are not merely arguments in a public spat: they are reference points by which the corporation assesses whether a location meets its standards. A public statement protects the chain’s reputation, and internally it becomes a criterion.
This is where the part the news usually leaves unsaid begins. McDonald’s platform operates under a model of “one model for everyone, each one’s own data”—and that model already has a court history in a neighboring market.
In August 2025, the U.S. Department of Justice announced a proposed settlement with Greystar, the country’s largest landlord, with nearly 950,000 apartments. According to the lawsuit, Greystar and other housing owners shared competitively sensitive information in order to receive pricing recommendations from RealPage algorithms, while the software itself contained “anticompetitive rules” that aligned prices; in addition, landlords directly discussed prices and software settings with one another.
The wording of Assistant Attorney General Abigail Slater sounds like a verdict on an entire era: “Whether in a smoke-filled room or through an algorithm, competitors cannot share competitively sensitive information or align prices to the detriment of American consumers.”
Under the settlement, Greystar must not use algorithms built on competitors’ data, must not take part in meetings arranged by RealPage, and, if it uses uncertified third-party software, must accept a court-appointed monitor. A monitor—that is, a person with access to documents who checks how the price works.
Now look at what McDonald’s itself writes in the terms of use for its pricing portal. It says that restaurant owners “may be competitors of each other,” and therefore “it is especially important to understand and fully comply with antitrust laws”; for further clarification, they are advised to consult their own lawyers.
The same document stipulates that franchisees “are always free to determine the final price.” William Kovacic, a former Federal Trade Commission commissioner and now director of George Washington University’s competition-law center, called this wording “an acknowledgment that a potential problem exists.” Other experts object: the “competitors” here are franchisees within the same chain, and courts have for decades given brands broad latitude to control the prices set by their operators.
Both positions are fair, and both point to the same place where the law has not yet made up its mind. McDonald’s has a second risk vector too—not an antitrust one. In August 2026, the Federal Trade Commission put out for public comment a draft policy on personalized pricing, meaning the use of personal data to set a price for a particular person.
The vote passed 2–0, and comments were accepted through September 18. FTC Chair Andrew Ferguson framed the objection without legal fog: “When a consumer sees a price, they expect that to be the same price everyone else sees, not a retailer’s estimate of how much they are willing to pay based on their personal data.” At the same time, he honestly noted that the commission does not have the authority to ban personalized prices in every case—the lever lies elsewhere: if a business does not explain how data is used to set a price, that may violate the law.
The space between these two vectors is precisely where McDonald’s pricing engine lives. It is not personalized—it is tied to the restaurant, not the person. Nor is it outright collusion: the chain has one model, but formally each owner makes the decision independently. It is in that gap—between “recommendation” and “mandate,” between “free to determine the price” and “constructively engage with an approved tool”—that the entire construction fits.
One more detail that did not make it into a single news reprint. In 2023, according to a lawsuit by Connecticut franchisee George Mitchell, the pricing tools proposed that he charge around $18 for a Big Mac combo sold from a roadside location. Reuters could not independently confirm precisely what the tool had recommended—it saw only the lawsuit. But the court materials contain a measurement: the price “did not result in lost sales,” meaning people bought it for $18. The viral screenshot, which was then debunked for a year and a half as a distortion of the picture, was apparently an accurate implementation of the model’s recommendation in a specific place.
It is worth lingering on that. The public scandal was built on two assumptions: that the $18 price was atypical and that someone had made it up. The first is true; the second, apparently, is not. The price was neither a mistake nor an owner’s whim—it was a calculation, and the calculation was right enough that revenue did not fall.
This is where it is useful to recall what the Big Mac Index has been doing since 1986. All this time, it has measured the purchasing power of currencies through the price of a burger assumed to be the same everywhere. McDonald’s, in essence, uses the same trick: it takes something that looks identical and extracts the difference from it. Economists do it through national prices. The company does it through prices within a country, neighborhood by neighborhood. The second calculation is more precise than the first because it has more data: economists have one figure per country; the pricing engine has 14,000 locations and millions of receipts in real time.
And here the ruler breaks not metaphorically, but literally. An economist measures some “American price level,” treating it as a unit. But if, within the United States, the same basket consisting of one burger costs $5.69 at one location and $6.89 two miles away, then the unit does not exist. There is a distribution. A 21% difference within a single city is not noise that can be averaged away: it is exactly the magnitude compared between countries. Annual swings in the index between, say, Switzerland and Taiwan are measured in tens of percent; the internal spread within a single American city is already comparable to the cross-country one.
Wikipedia, incidentally, knew all this before: it has long included a paragraph noting that Big Mac prices can vary greatly between areas within a single country. It was simply considered a margin of error in the method. Now it is the product of the method. The variation does not interfere with the measurement—it is managed.
There is a simpler version of the same story, and perhaps it is the most honest of all. In 2022, The Economist stopped averaging the American price across four cities and began using the figure McDonald’s sends it. The British newspaper’s index, which measures the purchasing power of currencies around the world, now starts from a number supplied by a company with 14,000 pricing engines of its own. Formally, it is simply a convenience of data collection. But the convenience works like this: the more complex the internal pricing system, the less likely it is that one submitted figure describes it.
And, incidentally, on what happens when a ruler is caught red-handed: the Argentine story of 2011 ended with the country no longer being measured on its own terms. The Economist did not abandon the index—it looked into it and concluded that the figures were being manipulated. An instrument built on the price of a product for which a foreign government was responsible turned out to be more sensitive to politics than to economics.
For forty years, the index rested on one assumption: a Big Mac is the same thing sold at different prices, and the difference in price is explained entirely by a country’s economics. The assumption had always been approximate—Swiss beef, Indian chicken, Argentine pressure from above. But those were distortions at the edges; they did not touch the instrument’s core: the baseline American price.
Now the core is calculated by a model. Not because McDonald’s decided to spoil someone else’s index—it does not care about the index at all. It is simply that economic calculations and corporate calculations are, in a sense, the same action, and the company does it better because it has more data and a direct incentive. It solves the same problem as The Economist: how much does this thing cost here? Only its answer is not one figure for the country, but 14,000 different ones.
You can test this version against the numbers, and it holds up. The 21% McDonald’s wrote about in 2024 had become 32% by the summer of 2026. The real argument was about something else—who sets the price. And here the answer is unequivocal: in the forty years economists have measured the world with a sandwich, the sandwich itself has ceased to be a unit of measurement in the sense that it once was. It has become a variable to be tuned.