McDonald’s aims to attract cost-conscious consumers with its $5 meal deal, but the profit margins from this promotion are expected to be minimal, ranging from 1% to 5%. This translates to a profit of approximately $0.05 to $0.25 per combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the deal is part of McDonald’s strategy to draw inflation-sensitive customers back into their restaurants, with hopes that once inside, they will purchase additional items beyond the $5 offer.
However, actual profitability relies on various factors including ingredient prices, labor costs, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Spiegel pointed out that while the deal may help to increase foot traffic, it does not guarantee that franchise owners will benefit. Approximately 95% of McDonald’s locations are franchise-owned, meaning these owners set their own prices and bear the burden of costs such as rent, insurance, permits, and taxes.
In earlier comments, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often use promotional campaigns like the $5 deal to manage their overhead expenses. Nevertheless, Spiegel emphasized that the meal bundle acts primarily as a “loss leader” aimed at attracting and retaining customers. When considering the additional costs associated with labor, packaging, condiments, delivery, and marketing, she noted that franchise owners often find it difficult to maintain any significant profit from the deal.