McDonald’s is expected to see only a slight profit from its $5 meal deal, with margins estimated between 1% and 5%, translating to a profit of approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski. The promotion aims to attract consumers who are feeling the pinch of inflation, encouraging them to purchase more than just the discounted meal.
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.”
Moreover, even if the deal succeeds in bringing customers back to the restaurants, franchisees may not see significant profits because approximately 95% of McDonald’s locations are franchise-owned. These franchise owners set their own prices and must balance various costs, including rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., noted that franchisees often launch promotions like the $5 meal offer to help manage overhead expenses. Nevertheless, Spiegel emphasized that this bundle serves primarily as a “loss leader” designed to attract and retain customers. She explained that once additional expenses such as labor, packaging, condiments, delivery charges, and marketing are considered, franchise owners often end up with minimal or no profit from the deal.