McDonald’s is expected to see a modest profit from its $5 meal deal, with profit margins projected to be between 1% and 5%. This translates to a profit of approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
The fast-food chain aims to attract inflation-weary consumers back into its restaurants, hoping that once customers are inside, they might purchase additional items beyond the $5 deal. However, the profitability of this offer hinges on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She highlighted that while the combo might draw diners back, franchisees may not directly benefit from the profits. Approximately 95% of McDonald’s locations are franchisee-owned, meaning that individual owners establish their own prices and manage additional costs like rent, insurance, permits, and taxes.
Joe Erlinger, McDonald’s U.S. president, noted in May that franchisees frequently try to counteract overhead costs by offering promotions, including the $5 meal deal. However, Spiegel emphasized that the deal serves primarily as a “loss leader” meant to attract and retain customers. Once various expenses are factored in—such as labor, packaging, condiments, delivery fees, and marketing—franchise owners may find that any profits on the items in the deal are effectively eliminated.