McDonald’s is expected to 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 per meal sold, according to restaurant analyst Mark Kalinowski.
The fast-food chain aims to attract inflation-weary consumers with this offering, hoping that customers will purchase additional items once they enter the restaurant. However, the ability to turn a profit will rely on various factors, including ingredient costs, labor, and overhead expenses.
Consultant Arlene Spiegel noted that the $5 meal deal is “more promotional than profitable.” While it might draw diners back, franchise owners may not see those profits since about 95% of McDonald’s locations are franchise-operated. This means franchisees set their own pricing and manage extra costs such as rent, insurance, permits, and taxes.
In a statement from May, Joe Erlinger, U.S. president of McDonald’s, mentioned that franchisees often offer promotions like the $5 meal deal to offset those overheads. Nonetheless, Spiegel described this bundle as a “loss leader” intended to attract and retain customers. After considering additional expenses related to labor, packaging, condiments, delivery, and marketing, she indicated that franchise owners could effectively negate any profit from the items offered in the deal.