McDonald’s is expected to achieve a minimal profit from its $5 meal deal, projecting a profit margin ranging from 1% to 5%. This translates to approximately $0.05 to $0.25 gained for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski notes that the promotion aims to attract inflation-weary customers back into the restaurants, with the hope that once inside, they will purchase more than just the $5 meal. However, profitability hinges on various factors including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She highlighted that while it may draw diners back, franchise owners might not benefit from the sales due to their own financial demands.
With around 95% of McDonald’s locations being franchise-owned, individual owners set their own prices and must manage their own expenses, including rent, insurance, permits, and taxes. In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often use promotional deals like the $5 meal to help offset these overhead costs.
Spiegel further explained that the meal deal acts as a “loss leader” aimed at attracting and retaining customers. After accounting for additional expenses such as labor, packaging, condiments, delivery fees, and marketing, she indicated that franchise owners could end up negating any potential profits from one or more items included in the bundle.