McDonald’s is expected to see a modest profit from its $5 meal deal, with profit margins projected between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski emphasized that this promotional offer aims to attract inflation-weary customers back to the restaurant, with the hope that they will make additional purchases beyond the $5 deal. However, turning a profit will be influenced by various factors, including the costs of ingredients, labor, and other overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, noted that the $5 meal deal is “more promotional than profitable.” While it might drive traffic to the restaurants, it does not guarantee that franchise owners will reap the benefits. Since approximately 95% of McDonald’s locations are franchise-owned, these owners establish their own pricing and manage rising expenses such as rent, insurance, permits, and taxes.
In a statement made in May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often implement promotional offers like the $5 meal deal to help alleviate their overhead costs. However, Spiegel described the bundle as a “loss leader” designed to attract customers. Once additional charges for labor, packaging, condiments, delivery, and marketing are considered, owners may effectively negate any potential profits from the deal.