McDonald’s may see a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, which translates to roughly $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
This promotional offer aims to draw back consumers who are feeling the effects of inflation, encouraging them to purchase more than just the $5 deal once they are in the store. However, profitability will rely on various factors, including the costs of ingredients, labor, and overhead.
Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is “more promotional than profitable.” Even if it attracts customers back to the restaurant, franchise owners, who make up about 95% of McDonald’s locations, may not see increased profits since they set their own prices and bear the burden of additional expenses like rent and taxes.
Joe Erlinger, president of McDonald’s U.S., explained that franchisees often implement promotional offers like the $5 meal deal to manage these overhead costs. Yet, according to Spiegel, the deal functions more as a “loss leader” to attract customers rather than as a significant profit generator. When accounting for various costs such as labor, packaging, condiments, delivery, and marketing, she concluded that franchise owners could eliminate any potential profit from the items included in the deal.