McDonald’s is expected to generate a small profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski. This initiative aims to attract budget-conscious consumers back to the restaurant while encouraging them to purchase additional items.
However, achieving a profit will be influenced by various factors, such as ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Despite the potential to draw customers to the restaurant, franchise owners may not see these profits due to their ability to set their own prices and coverage of added expenses like rent, insurance, permits, and taxes. Approximately 95% of McDonald’s locations are franchisee-operated.
In May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often introduce promotional deals like the $5 meal to help manage these overhead costs. Nevertheless, Spiegel noted that the bundle acts more as a “loss leader” intended to attract customers rather than as a significant profit-generating item. When accounting for additional costs such as labor, packaging, condiments, delivery fees, and marketing, franchise owners may eliminate any potential profit from the meal deal.