McDonald’s may see a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 for each combo sold. According to restaurant analyst Mark Kalinowski, this deal is a strategy to attract inflation-weary consumers back to the restaurant, encouraging them to purchase additional items beyond the $5 offering.
However, achieving profitability will depend on various factors including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is more about promotion than profit.
Although the combo may drive traffic to the restaurants, it does not guarantee profits for franchise owners. With around 95% of McDonald’s locations being franchise-operated, owners have the flexibility to set their own prices and must manage various costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often rely on promotional offers like the $5 meal deal to help offset these overhead costs. However, Spiegel emphasized that the bundle serves more as a “loss leader” aimed at attracting and retaining customers. When factoring in additional expenses such as labor, packaging, condiments, delivery, and marketing, franchise owners often find that they eliminate any potential profits from the deal.