McDonald’s is expected to generate only a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to earnings of about $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
This promotional offer is part of McDonald’s strategy to attract price-sensitive consumers affected by rising inflation, with the hope that customers will purchase additional items once they enter the restaurant.
However, the ability to turn a profit hinges on various factors such as ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, indicated that the $5 meal deal is “more promotional than profitable.”
While McDonald’s aims to bring diners back, franchise owners—who operate approximately 95% of McDonald’s locations—set their own prices and manage further expenses like rent, permits, and insurance. These added costs can significantly impact overall profitability.
In May, Joe Erlinger, president of McDonald’s U.S., noted that franchisees implement promotional deals like the $5 meal to address overhead expenses. Nonetheless, Spiegel remarked that such deals often serve as “loss leaders” to attract customers rather than as a means to generate substantial profit. Once all costs related to labor, packaging, condiments, delivery, and marketing are considered, franchise owners may end up with little to no profit from these promotional items.