McDonald’s may see only a modest profit from its $5 meal deal, estimated to be between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
The fast-food giant hopes the promotion will attract inflation-weary consumers back into its restaurants, encouraging them to purchase more than just the $5 meal. However, achieving profitability hinges on various factors, including the costs of ingredients, labor, and overall operational expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She pointed out that even if the deal successfully draws diners back, franchisees may not necessarily benefit from those sales due to the structure of their business.
With around 95% of McDonald’s locations being franchisee-owned, individual owners set their own pricing and must contend with additional expenses, such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., noted that franchisees often implement promotional offers like the $5 meal deal to help manage overhead costs. Spiegel added that the bundle serves more as a “loss leader to capture and re-capture guests.” Factoring in the costs of labor, packaging, condiments, delivery, and marketing, she concluded that franchise owners “essentially wipe out any profit on any one or all of the items in the deal.”