McDonald’s might see some profit from its $5 meal deal, although it will only be modest. Analyst Mark Kalinowski predicts a profit margin of about 1% to 5%, equating to $0.05 to $0.25 for each bundle sold.
Kalinowski suggests that this deal is a strategy by McDonald’s to attract inflation-weary consumers back into their restaurants, anticipating that once inside, customers might purchase more than just the $5 meal.
However, profitability will depend on several factors, such as ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, describes the deal as “more promotional than profitable.” She notes that even if the deal attracts customers, it doesn’t guarantee profits for franchisees, who own about 95% of McDonald’s locations and set their own prices while managing additional costs like rent, insurance, permits, and taxes.
In May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees attempt to offset these overhead costs with promotional offers like the $5 meal deal. Despite this, Spiegel describes the bundle as a “loss leader” aimed at drawing in and retaining customers. Once all costs including labor, packaging, condiments, delivery charges, and marketing are considered, franchisees likely see little to no profit from these deals.