McDonald’s is expected to generate a modest profit from its $5 meal deal, with margins estimated between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this initiative aims to attract inflation-weary customers back to the restaurant, hoping they will purchase more than just the $5 meal. However, profitability will hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” While it may help bring customers into McDonald’s, it doesn’t guarantee that franchise owners will also see these profits. Approximately 95% of McDonald’s locations are owned by franchisees, who must set their own prices and manage additional costs like rent, insurance, permits, and taxes.
In statements made in May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often implement promotional offers, such as the $5 meal deal, to offset those overhead costs. Despite this strategy, Spiegel emphasized that the bundle serves primarily as a “loss leader” intended to attract and retain customers. Once labor, packaging, condiments, delivery charges, and marketing costs are accounted for, franchise owners typically find that any potential profit from the individual items in the deal is significantly diminished.