McDonald’s may generate a modest profit from its $5 meal deal, as the profit margin is expected to be between 1% and 5%, translating to approximately $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this promotion aims to attract inflation-weary consumers back to the restaurant, encouraging them to spend on items beyond just the $5 deal.
However, profitability will hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, pointed out that the $5 meal deal is primarily “more promotional than profitable.” Even if the offer draws customers to the restaurants, franchise owners may not see significant profits, as approximately 95% of McDonald’s locations are franchisee-operated. This means franchisees set their own prices and must manage extra expenses like rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchise owners often try to offset these overhead costs by implementing promotional deals, such as the $5 meal offer.
Nonetheless, Spiegel emphasized that the deal functions more as a “loss leader to capture and re-capture guests.” Once all additional costs, including labor, packaging, condiments, delivery charges, and marketing, are accounted for, franchise owners may find that any potential profits are effectively erased.