McDonald’s aims to achieve modest profits from its $5 meal deal, with projections suggesting a profit margin between 1% to 5%. This translates to earnings of approximately $0.05 to $0.25 for each combo sold, as noted by restaurant analyst Mark Kalinowski.
Kalinowski indicated that this meal deal is part of McDonald’s strategy to attract budget-conscious customers, hoping that once patrons enter the restaurant, they will purchase additional items beyond the $5 offer.
However, generating a profit will hinge on several variables, including ingredient costs, labor expenses, and overhead. Arlene Spiegel, president of Arlene Spiegel & Associates consulting firm, labeled the meal deal as “more promotional than profitable.”
Spiegel emphasized that even if this combo brings customers into the restaurant, franchise owners may not necessarily enjoy those gains. Approximately 95% of McDonald’s locations are franchisee-operated; thus, owners determine their prices and manage additional costs such as rent, insurance, permits, and taxes.
In a statement made in May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often implement promotional offers, like the $5 meal deal, to manage their overhead costs.
Still, Spiegel described the deal as more of a “loss leader,” intended to attract and retain guests. After accounting for other expenses such as labor, packaging, condiments, delivery fees, and marketing costs, she noted that owners might ultimately eliminate any profits associated with the promotional items.