McDonald’s may see some profit from its $5 meal deal, but it will be limited. According to restaurant analyst Mark Kalinowski, the expected profit margin on this combo is between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal sold.
Kalinowski noted that the promotion aims to entice inflation-weary consumers to return to the restaurant, hoping that once inside, they will make additional purchases beyond the $5 offering. However, the overall profitability will be influenced by several 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 even if the combo attracts customers back, franchise owners may not necessarily benefit from the profits. Approximately 95% of McDonald’s restaurants are franchisee-owned, which means that owners establish their own pricing and must cover extra expenses like rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees attempt to offset overhead costs through promotional offers, such as the $5 meal deal. However, Spiegel suggested that the deal serves primarily as a “loss leader” to attract and retain customers. Once additional costs for labor, packaging, condiments, delivery, and marketing are considered, she noted that franchise owners may effectively lose any potential profit from the deal.