McDonald’s may generate a profit from its $5 meal deal, but it is expected to be a modest one. Restaurant analyst Mark Kalinowski estimates that the profit margin on this combo meal will range between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold.
Kalinowski noted that this initiative aims to attract inflation-weary consumers back into the restaurants, encouraging them to purchase more than just the $5 offering. However, the ability to maintain profitability is contingent upon several factors, including the costs of ingredients, labor, and operating expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, emphasized that the $5 meal deal tends to be “more promotional than profitable.” She also pointed out that, while this deal may draw diners into the restaurant, franchise owners may not see incremental profits.
Approximately 95% of McDonald’s locations are franchisee-owned, meaning that individual owners set their own prices and manage additional expenses such as rent, insurance, permits, and taxes. In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often attempt to offset these overhead costs by implementing promotional offers like the $5 meal deal.
Nonetheless, Spiegel remarked that the meal deal essentially serves as a “loss leader” to attract and retain customers. Once various costs—such as labor, packaging, condiments, delivery fees, and marketing—are accounted for, she indicated that franchise owners are likely to see minimal or no profit from the items included in the deal.