McDonald’s may see some profit from its $5 meal deal, but it will be relatively modest. According to restaurant analyst Mark Kalinowski, the profit margin on the combo is expected to be between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold.
Kalinowski noted that this deal is an effort by McDonald’s to attract cost-conscious consumers and encourage them to purchase more than just the $5 meal. However, the actual profitability 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 pointed out that while the combo may draw customers back to the restaurant, franchisees may not see a corresponding increase in profits.
With around 95% of McDonald’s locations being franchise-owned, individual owners set their own prices and face various expenses like rent, insurance, permits, and taxes. McDonald’s U.S. president Joe Erlinger mentioned in May that franchisees often use promotional offers to help mitigate these overhead costs.
Spiegel emphasized that the deal functions primarily as a “loss leader” aimed at attracting and retaining customers. After accounting for additional costs such as labor, packaging, condiments, delivery fees, and marketing, she explained that franchise owners may effectively eliminate any profit from the meal deal.