McDonald’s could earn a small profit from its $5 meal deal, with estimates suggesting a profit margin of between 1% and 5%. This translates to roughly $0.05 to $0.25 earned for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the meal deal is part of McDonald’s strategy to attract consumers fatigued by rising food prices, hoping that once customers are inside the restaurant, they will purchase additional items beyond the $5 offer.
However, profitability will depend on various factors, including ingredient costs, labor expenses, and other overheads. Arlene Spiegel, president of Arlene Spiegel & Associates, remarked that the $5 meal deal is “more promotional than profitable.”
Even if the meal deal brings diners back, franchise owners may not see any significant profit, as approximately 95% of McDonald’s locations are franchise-operated. These franchisees set their own prices and must contend with additional costs like rent, insurance, permits, and taxes.
Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often use promotional deals, like the $5 meal offer, to offset overhead costs. Nevertheless, Spiegel indicated that the bundle acts more as a “loss leader” aimed at attracting customers, ultimately leading to negligible profits due to the associated costs of labor, packaging, condiments, delivery, and marketing.