McDonald’s is expected to earn a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to around $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the meal deal is intended to entice inflation-burdened consumers back into the restaurant, with the hope that customers will purchase additional items beyond the $5 offering. However, the potential for profitability is influenced by several factors, including the costs of ingredients, labor, and overall overhead.
Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She emphasized that while the combo may successfully attract diners to McDonald’s, it does not guarantee that franchisees will see those profits.
Approximately 95% of McDonald’s locations are franchisee-owned, which means individual owners set their own pricing and must deal with various additional costs such as rent, insurance, permits, and taxes. In a statement from May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees typically attempt to offset these overhead expenses by offering promotions like the $5 meal deal.
Despite this effort, Spiegel indicated that the combo primarily serves as a “loss leader” to attract and retain customers. After accounting for labor, packaging, condiments, delivery fees, and marketing expenses, she noted that franchise owners likely eliminate any profit that could be garnered from the items in the deal.