McDonald’s may see a small profit from its $5 meal deal, reportedly between 1% and 5%, translating to approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
This promotional offer aims to attract consumers feeling the pinch of inflation, encouraging them to make additional purchases once they are in the restaurant. However, profitability will hinge on several factors, including ingredient costs, labor expenses, and overhead.
Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.” She emphasized that while this deal could draw customers back to McDonald’s, it may not guarantee profits for franchisees, who own about 95% of McDonald’s locations. Franchise owners are responsible for setting their own prices and managing various costs such as rent, insurance, permits, and taxes.
In May, McDonald’s U.S. president Joe Erlinger noted that franchisees often employ promotions like the $5 meal deal to reduce overhead costs. Nevertheless, Spiegel referred to the bundle as a “loss leader,” aimed at attracting and retaining customers. Taking into account the extra costs associated with labor, packaging, condiments, delivery, and marketing, she stated that franchisees often end up eliminating any potential profits from this deal.