McDonald’s is expected to see a modest profit from its $5 meal deal, projecting profit margins between 1% and 5%, equating to approximately $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
This initiative aims to attract inflation-weary consumers, encouraging them to make additional purchases once they enter the restaurant. However, profitability is influenced by several factors, including ingredient costs, labor expenses, and operational overhead.
Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is primarily a promotional tactic rather than a significant profit generator. Although the deal might draw customers back into McDonald’s, it does not guarantee profits for the franchisees.
With around 95% of McDonald’s locations being franchise-owned, individual owners have the autonomy to set their own prices while managing additional costs such as rent and insurance.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often implement promotional offers like the $5 meal deal to help offset overhead costs. However, Spiegel emphasizes that the bundle acts more as a “loss leader” intended to attract customers, and when considering the extra costs associated with labor, packaging, and marketing, franchise owners often find that any potential profit is significantly diminished.