McDonald’s might see some profit from its $5 meal deal, but it is expected to be minimal. According to restaurant analyst Mark Kalinowski, the profit margin for the meal combo is projected to be between 1% and 5%, which translates to approximately $0.05 to $0.25 for each package sold.
Kalinowski noted that this offering is McDonald’s strategy to attract inflation-pressed consumers back into their locations, hoping that once customers are in, they will make additional purchases beyond the $5 deal.
However, making a profit will depend on various elements such as ingredient costs, labor, and other operational expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the $5 meal deal is primarily a promotional strategy rather than a major profit-generating one.
Despite the potential to draw customers back into the restaurant, it may not necessarily translate into profits for franchise owners. Approximately 95% of McDonald’s restaurants are franchise-owned, meaning these owners determine their own pricing and deal with expenses like rent, insurance, permits, and taxes.
Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees utilize promotional offers like the $5 meal deal to mitigate overhead costs. Nonetheless, Spiegel described the deal as a loss leader aimed at attracting and retaining customers. Once factors such as labor, packaging, condiments, delivery expenses, and marketing are accounted for, she indicated that owners might lose any profit from the items included in the deal.