McDonald’s could see a modest profit from its $5 meal deal, but the margins are likely to be slim, ranging from 1% to 5%, translating to a profit of just $0.05 to $0.25 per meal. This observation comes from restaurant analyst Mark Kalinowski, who notes that the promotion aims to attract inflation-weary consumers back into the restaurant, hoping that they will purchase more items beyond the $5 combo.
However, the profitability of this deal hinges on various factors, including the costs of ingredients, labor, and operational expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, remarked that the $5 meal deal is “more promotional than profitable.” She highlighted that even if this offer draws diners in, the benefits may not reach the franchisees, who own approximately 95% of McDonald’s locations.
Franchise owners set their own prices and must manage various additional costs such as rent, insurance, and taxes. In May, Joe Erlinger, president of McDonald’s U.S. operations, mentioned that franchisees often introduce promotional deals like the $5 meal to help offset overhead costs. Nonetheless, Spiegel pointed out that, when accounting for labor, packaging, condiments, delivery charges, and marketing expenses, franchise owners often eliminate any profit from the deal or its components.