McDonald’s is projected to earn a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
Kalinowski emphasized that this promotion is part of McDonald’s strategy to entice inflation-burdened consumers back into their restaurants, with the hope that customers will purchase additional items beyond the $5 meal.
However, the profitability of the deal will heavily rely on various factors, including the prices of ingredients, labor costs, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
She cautioned that even if the deal brings customers through the door, it doesn’t guarantee that individual franchise owners will benefit, as about 95% of McDonald’s restaurants are franchised. Franchisees set their own prices and are responsible for extra costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., remarked that franchisees often use promotions like the $5 meal deal to help offset these ongoing overhead costs. Nonetheless, Spiegel pointed out that the deal functions more like a “loss leader” aimed at attracting or retaining customers. Once all associated costs—such as labor, packaging, condiments, delivery fees, and marketing—are considered, she noted that franchisees might end up eliminating any potential profit from the offerings included in the deal.