McDonald’s is expected to see minimal profits from its $5 meal deal, with margins estimated between 1% and 5%. This translates to approximately $0.05 to $0.25 earned for each meal bundle sold, according to restaurant analyst Mark Kalinowski.
Kalinowski pointed out that this deal is part of McDonald’s strategy to attract cost-conscious consumers dealing with inflation, with the hope that customers will also make additional purchases while at the restaurant.
However, actual profitability may be influenced by various factors, including ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, remarked that the $5 meal deal is seen as “more promotional than profitable.”
Even if the deal successfully brings customers back, it may not guarantee profits for franchise owners, as about 95% of McDonald’s locations are franchise-operated. This means individual owners manage their pricing and contend with expenses like rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often use promotional deals like the $5 offer to help offset their operating costs. However, Spiegel noted that the deal may act more as a “loss leader” aimed at drawing customers in rather than generating significant profit. When considering additional expenses such as labor, packaging, condiments, delivery, and marketing, she stated that franchise owners often find any potential profit from the deal is virtually eliminated.