McDonald’s is expected to make only a modest profit from its $5 meal deal, with profit margins ranging between 1% and 5%, translating to about $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
The fast-food chain is using this promotion as a strategy to attract inflation-weary consumers back to its outlets, with hopes that customers will choose to purchase additional items beyond the $5 offer. However, profitability will also hinge on various factors, including the prices of ingredients, labor costs, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.” She noted that even if traffic to the restaurant increases, it may not directly benefit franchise owners, who operate around 95% of McDonald’s locations and must manage their own pricing and operational costs like rent, insurance, permits, and taxes.
In discussions about operational strategies, McDonald’s U.S. president Joe Erlinger indicated that franchisees often attempt to offset these overhead costs through promotional offers like the $5 meal deal. Nonetheless, Spiegel pointed out that the bundle essentially acts as a “loss leader” aimed at attracting and retaining customers. Once other expenses such as labor, packaging, condiments, delivery fees, and marketing are considered, she stated that franchise owners could eliminate any potential profits from the deal entirely.