McDonald’s may generate some profit from its $5 meal deal, but it is expected to be limited. According to restaurant analyst Mark Kalinowski, the profit margin for this combo could range from 1% to 5%, translating to approximately $0.05 to $0.25 for each bundle sold.
This meal deal is part of McDonald’s strategy to attract consumers struggling with inflation. The company aims not only to bring customers in with the $5 offer but also to encourage them to purchase additional items during their visit.
However, the profitability of this meal deal hinges on various factors, including the costs of ingredients, labor, and overall operational expenses. Consulting firm president Arlene Spiegel noted that the deal is more promotional than profitable.
While the promotion might help bring diners back to McDonald’s, it does not guarantee that franchisees will benefit from these sales. Approximately 95% of McDonald’s locations are owned by franchisees who set their own prices and manage their operating costs, such as rent, insurance, permits, and taxes.
In a statement from May, Joe Erlinger, the president of McDonald’s U.S., mentioned that franchisees often try to offset their overhead by running promotional offers like the $5 meal deal. Despite this effort, Spiegel emphasized that the meal deal functions primarily as a “loss leader” designed to attract and retain customers. When the costs associated with labor, packaging, condiments, delivery, and marketing are taken into account, many franchise owners may find that any potential profit from the deal is significantly diminished.