McDonald’s is expected to generate only a modest profit from its new $5 meal deal, with profit margins estimated to be between 1% and 5%. This translates to approximately $0.05 to $0.25 for each meal bundle sold, according to restaurant analyst Mark Kalinowski.
The fast-food chain aims to attract price-sensitive customers, encouraging them to return to restaurants and potentially purchase additional items beyond the $5 offering. However, overall profitability will be influenced by various factors, including ingredient costs, labor, and other operational expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She pointed out that while this offer may bring customers into the restaurants, it does not guarantee that franchise owners will share in the profits.
Approximately 95% of McDonald’s locations are franchise-owned, meaning these owners establish their own prices and manage extra costs, including rent, insurance, permits, and taxes. In a statement from May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often run promotional campaigns, such as the $5 meal deal, to help offset these overhead expenses.
Despite the effort to draw customers in, Spiegel emphasized that the promotion functions as a “loss leader” designed to attract and retain guest traffic. When additional costs for labor, packaging, condiments, delivery, and marketing are considered, franchise owners may find that profits from the deal are effectively eliminated.