McDonald’s is expected to see only a modest profit from its $5 meal deal, with profit margins anticipated to range between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for every meal bundle sold, according to restaurant analyst Mark Kalinowski.
The fast-food giant hopes that this deal will attract inflation-weary customers and encourage them to make additional purchases once they visit the restaurant. However, profitability is contingent on several variables such as ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that even if the combo attracts more diners, it may not result in increased profits for franchisees.
With approximately 95% of McDonald’s restaurants being franchised, local owners set their own pricing and manage their own expenses, including rent, insurance, permits, and taxes. Joe Erlinger, president of McDonald’s U.S., mentioned in May that franchise owners often aim to alleviate overhead costs through promotional strategies like the $5 meal.
Despite these efforts, Spiegel emphasized that the bundle is essentially a “loss leader” intended to attract customers. She cautioned that when accounting for additional expenses such as labor, packaging, condiments, delivery fees, and marketing, franchise owners may ultimately eliminate any potential profit from the meal deal.