McDonald’s may see a modest profit from its $5 meal deal, projected to be between 1% and 5%, equating to about $0.05 to $0.25 per meal sold, according to restaurant analyst Mark Kalinowski. The initiative aims to attract inflation-weary customers back to the restaurant, with the goal of encouraging them to purchase more than just the $5 meal.
However, actual profitability hinges on various factors, including ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the meal deal as being “more promotional than profitable.”
While the $5 meal may draw customers, it doesn’t guarantee that franchisees will benefit from increased profits. Approximately 95% of McDonald’s locations are franchise-owned, meaning franchisees set their own prices and must cover additional expenses like rent, insurance, and taxes.
Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often implement promotional offers like the $5 meal deal to help manage their overhead costs. Nevertheless, Spiegel noted that the deal serves primarily as a “loss leader” aimed at attracting and retaining customers. After considering the added costs for labor, packaging, condiments, delivery, and marketing, she indicated that franchise owners could end up eliminating their profits entirely from the items in the deal.