McDonald’s may generate some profit from its $5 meal deal, though it is expected to be modest. Restaurant analyst Mark Kalinowski predicts that the profit margin on this combo will range between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal sold.
Kalinowski notes that the meal deal aims to attract consumers who are struggling with inflation and hopes to encourage them to purchase more than just the $5 offer once inside the restaurant. However, profitability will largely hinge on factors such as ingredient prices, labor costs, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, remarked that the $5 meal deal is “more promotional than profitable.” She highlighted that while the combo could bring customers back, it might not result in profits for franchisees, who own about 95% of McDonald’s locations. These owners are responsible for setting their own prices and managing extra costs, including rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often use promotional offers like the $5 meal to reduce overhead costs. Despite this, Spiegel characterized the deal as a “loss leader” aimed at attracting and retaining customers. After accounting for additional expenses such as labor, packaging, condiments, delivery charges, and marketing, she stated that franchise owners could effectively eliminate any potential profit from the deal.