McDonald’s may see some profit from its $5 meal deal, but it is expected to be minimal. According to restaurant analyst Mark Kalinowski, the profit margin on this combo meal is anticipated to be between 1% and 5%, translating to roughly $0.05 to $0.25 for each bundle sold.
Kalinowski noted that the meal deal is designed to attract inflation-conscious customers back to the restaurants, with the hope that they will purchase more items beyond the $5 offering. However, profitability is contingent on various factors, including ingredient costs, labor expenses, and overhead.
Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.” Even if the deal successfully draws patrons into the restaurants, it does not guarantee that franchise owners will benefit from the profits. About 95% of McDonald’s locations are franchise-operated, meaning owners set their own prices and must manage various costs, including rent, insurance, permits, and taxes.
In May, Joe Erlinger, the president of McDonald’s U.S., mentioned that franchisees often introduce promotional offers like the $5 meal to alleviate some of their operational expenses. However, Spiegel indicated that the deal serves more as a “loss leader” aimed at attracting and retaining customers.
With additional costs for labor, packaging, condiments, delivery, and marketing factored in, she remarked that franchisees might ultimately eliminate any potential profit from the items featured in the deal.