McDonald’s may see a modest profit from its $5 meal deal, with expected profit margins ranging from 1% to 5%. This translates to approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the deal aims to attract inflation-stressed customers back to the restaurant and encourage them to purchase additional items beyond the $5 meal.
However, the potential for profit will depend on various factors, including the costs of ingredients, labor, and overhead. Arlene Spiegel, president of Arlene Spiegel & Associates, pointed out that the $5 meal deal is “more promotional than profitable.” She indicated that while the deal might draw diners in, franchisees may not necessarily benefit from the profits.
Approximately 95% of McDonald’s locations are franchise-owned, meaning the owners set their own prices and shoulder additional costs such as rent, insurance, permits, and taxes. In May, U.S. President Joe Erlinger mentioned that franchisees implement promotional offers like the $5 meal to help manage overhead expenses.
Despite this strategy, Spiegel described the bundle as more of a “loss leader” aimed at capturing and recapturing customers. After accounting for various costs related to labor, packaging, condiments, delivery, and marketing, she stated that franchise owners effectively eliminate any potential profit from the items included in the deal.