McDonald’s is expected to achieve only a modest profit from its $5 meal deal, with profit margins anticipated to range between 1% and 5%. This translates to roughly $0.05 to $0.25 gained for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski explained that this meal deal aims to attract inflation-sensitive consumers back into McDonald’s locations, hoping these customers will also purchase additional items beyond the $5 offering.
However, the ability to generate profit will rely on several factors, including the costs associated with ingredients, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, remarked that the $5 meal deal is “more promotional than profitable.”
Additionally, even if the deal succeeds in drawing customers back to the restaurants, this does not guarantee that the franchisees will benefit financially. Approximately 95% of McDonald’s locations are franchise-operated, meaning these owners determine their pricing strategies and must manage increased costs such as rent, insurance, permits, and taxes.
In a statement made in May, Joe Erlinger, the president of McDonald’s U.S., noted that franchisees often use promotional deals like the $5 meal to help offset their overhead costs.
Despite these efforts, Spiegel pointed out that the meal bundle primarily serves as a “loss leader to capture and re-capture guests.” Once the significant costs involved in labor, packaging, condiments, delivery, and marketing are considered, she indicated that franchise owners essentially eliminate any profit from the items within the deal.