McDonald’s may find a way to profit from its new $5 meal deal, although the profit margin will likely be modest. Restaurant analyst Mark Kalinowski predicts the fast food chain could earn between 1% and 5% on each bundle sold, translating to roughly $0.05 to $0.25 in profit.
Kalinowski emphasized that the deal is part of McDonald’s strategy to entice consumers who are feeling the effects of inflation. The goal is not only to attract customers with the affordable offering but also to encourage them to purchase additional items while dining in.
However, profitability will hinge on various factors, including the costs of ingredients, labor, and operational expenses. According to Arlene Spiegel, president of Arlene Spiegel & Associates, the $5 meal deal is more of a promotional strategy than a profitable venture.
Spiegel pointed out that even if the promotion succeeds in drawing customers back, franchise owners—who operate about 95% of McDonald’s locations—may not see those profits. Franchisees are responsible for setting their prices and managing additional costs like rent, insurance, permits, and taxes.
In a recent statement, McDonald’s U.S. president Joe Erlinger explained that franchisees often leverage promotional deals, such as the $5 meal, to manage overhead costs. Nonetheless, Spiegel noted that when franchisees factor in expenses for labor, packaging, condiments, delivery, and marketing, they may end up with negligible profits or even losses on each item within the deal.