McDonald’s may achieve only a modest profit from its $5 meal deal, with margins estimated at between 1% to 5%, translating to gains of approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
This initiative aims to attract consumers feeling the effects of inflation back into the restaurant, encouraging them to purchase more than just the discounted meal. However, profitability will be influenced by variables such as ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that even if this offer brings diners into the restaurant, it does not guarantee profits for franchisees.
With about 95% of McDonald’s locations owned by franchisees, each owner sets prices independently and manages extra costs like rent, insurance, and taxes. In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often use promotional deals like the $5 meal offer to offset these overhead expenses.
Yet, Spiegel emphasized that this bundle serves more as a “loss leader” aimed at attracting customers. When accounting for the additional expenses related to labor, packaging, condiments, delivery, and marketing, she indicated that owners essentially eliminate any potential profit from the meal deal.