McDonald’s may find a modest profit margin with its $5 meal deal, estimated between 1% and 5%, translating to a profit of approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
The promotion aims to attract consumers who are concerned about rising costs, encouraging them to enter the restaurant and potentially purchase additional items beyond the $5 offer. However, the ability to generate profit will hinge on various factors, including ingredient prices, labor costs, and overhead expenses.
Consultant Arlene Spiegel described the $5 meal deal as “more promotional than profitable.” She noted that while it might draw customers back into the restaurants, franchise owners may not benefit directly from these profits. Approximately 95% of McDonald’s locations are franchise-operated, meaning franchisees establish their own pricing strategies while managing additional expenses like rent, insurance, permits, and taxes.
Joe Erlinger, McDonald’s U.S. president, previously commented that franchisees frequently implement promotional strategies, such as the $5 meal deal, to offset overheads. Nonetheless, Spiegel emphasized that the bundle primarily serves as a “loss leader” to attract and retain customers. When considering added costs related to labor, packaging, condiments, delivery, and marketing, she indicated that franchise owners might erase any potential profit associated with the items included in the deal.