McDonald’s may generate a profit from its $5 meal deal, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin on the combo is likely to range from 1% to 5%, translating to approximately $0.05 to $0.25 per bundle sold.
Kalinowski believes this promotion aims to attract inflation-weary customers back to McDonald’s, with the hope that they will purchase more than just the $5 meal. However, profitability will depend on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.” Even if this deal draws customers in, franchisees may not see significant profit gains, as about 95% of McDonald’s locations are franchised. Franchise owners set their own prices and must account for expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., stated that franchisees often run promotions like the $5 meal deal to manage overhead costs. However, Spiegel pointed out that the bundle serves as a “loss leader” aimed at attracting and retaining customers. Once franchisees factor in additional costs such as labor, packaging, condiments, delivery charges, and marketing, they may effectively eliminate any profit from the items included in the deal.