McDonald’s may see a modest profit from its $5 meal deal, according to restaurant analyst Mark Kalinowski. The profit margin for the combo is expected to range between 1% and 5%, translating to approximately $0.05 to $0.25 for each sale.
This meal deal is part of McDonald’s strategy to attract budget-conscious consumers amid rising inflation. The goal is not just to draw customers with the $5 offer but to encourage them to purchase more items once inside the restaurant.
However, the actual profitability of the deal will be influenced by several factors, including ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the meal deal as “more promotional than profitable.”
Spiegel pointed out that, although the deal might bring customers back, franchise owners may not benefit directly from the profits. Approximately 95% of McDonald’s locations are franchise-operated, meaning that individual franchisees set their own prices and manage additional costs, such as rent, insurance, and taxes.
Joe Erlinger, McDonald’s U.S. president, noted in May that franchisees often implement promotional offers like the $5 meal deal to help offset their overhead costs. Despite this, Spiegel added that the bundle primarily serves as a “loss leader” to attract customers. When considering costs for labor, packaging, condiments, delivery, and marketing, franchise owners may effectively eliminate any potential profit from the deal.