McDonald’s is expected to make a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%. This translates to earnings of roughly $0.05 to $0.25 for each combo sold, as noted by restaurant analyst Mark Kalinowski.
The fast-food chain introduced this deal as a strategy to attract customers who are feeling the pressure of inflation, with the hope that once they come in, they might purchase more than just the $5 meal.
However, generating a profit will hinge on various factors, including the costs of ingredients, labor, and other operational expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.”
Even if the promotion successfully brings diners back, franchise owners may not see significant profits. Approximately 95% of McDonald’s locations are franchise-owned, meaning each owner sets their own prices and bears the burden of additional expenses such as rent, insurance, and taxes.
In a recent statement, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often introduce promotional offers like the $5 meal deal to help offset overhead costs. Still, Spiegel pointed out that the deal acts more as a “loss leader” aimed at attracting customers. Once all associated costs—including labor, packaging, condiments, delivery, and marketing—are considered, owners could end up negating any profit from the deal.