McDonald’s is expected to see a modest profit from its $5 meal deal, with margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
This meal deal aims to attract consumers who are feeling the pinch of inflation, enticing them to enter the restaurant with the hope that they will also purchase additional items. However, the profitability of this offer depends on various factors, including ingredient costs, labor expenses, and overall overhead.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, characterized the $5 meal deal as being “more promotional than profitable.” She pointed out that while the deal may draw diners back to the restaurant, it does not guarantee that franchisees will benefit from any profits.
Approximately 95% of McDonald’s locations are franchise-owned, meaning that individual owners determine their own pricing and bear additional expenses such as rent, insurance, permits, and taxes. In May, McDonald’s U.S. president Joe Erlinger noted that franchisees often use promotional offers like the $5 meal deal to offset these overhead costs.
Despite this strategy, Spiegel described the bundle as a “loss leader aimed at capturing and re-capturing guests.” She explained that when you account for costs related to labor, packaging, condiments, delivery, and marketing, franchise owners often find that any potential profits from the deal are effectively eliminated.