McDonald’s is likely to see only a modest profit from its $5 meal deal, with profit margins anticipated between 1% and 5%, translating to gains of approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski. This promotional strategy aims to attract inflation-weary consumers back into the restaurants, encouraging them to purchase more items beyond the $5 offering.
However, the profitability of this deal hinges on various factors, including ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the meal deal as “more promotional than profitable.” She noted that while the combo aims to draw customers in, franchisees may not see these profits directly.
Approximately 95% of McDonald’s locations are owned by franchisees, who set their own prices and bear additional costs such as rent, insurance, permits, and taxes. In May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often run promotional offers like the $5 meal deal to manage overhead expenses.
Despite these efforts, Spiegel characterized the bundle as a “loss leader,” designed primarily to attract and retain customers. Once accounting for the costs of labor, packaging, condiments, delivery, and marketing, she indicated that franchise owners could end up negating any profit derived from the items included in the deal.