McDonald’s may achieve a modest profit from its $5 meal deal, estimated to be between 1% and 5%, which translates to roughly $0.05 to $0.25 per combo sold, according to restaurant analyst Mark Kalinowski.
This promotional offer aims to attract inflation-weary consumers back to the restaurant, with hopes that once inside, customers will purchase more than just the $5 meal.
However, the actual profitability of the deal hinges on various factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is more about promotion than profitability.
While the deal might help draw diners back in, it does not guarantee profits for franchisees, who own approximately 95% of McDonald’s locations. These franchisees set their own prices and face additional burdens such as rent, insurance, permits, and taxes.
Joe Erlinger, McDonald’s U.S. president, previously indicated that franchisees use promotional offers like the $5 meal deal to offset their overhead costs. However, Spiegel remarked that the offering functions more as a “loss leader,” designed to attract customers and encourage repeat visits. After accounting for labor, packaging, condiments, delivery charges, and marketing, franchise owners often find that their profits are diminished or eliminated entirely.