McDonald’s is expected to earn a small profit from its $5 meal deal, with profit margins projected to be between 1% and 5%. This equates to about $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
This promotional offer aims to attract consumers who are weary of inflation back to the restaurants, with the hope that they will purchase additional items beyond the $5 deal. However, profitability will also hinge on factors such as ingredient costs, labor, and overhead expenses.
Consulting firm president Arlene Spiegel noted that the $5 meal deal is “more promotional than profitable.” Even if it successfully draws customers back in, it may not translate into profits for franchise owners, who represent approximately 95% of McDonald’s locations and are responsible for setting their own prices and managing additional costs like rent, insurance, and taxes.
In May, McDonald’s U.S. president Joe Erlinger pointed out that franchisees often use such promotions to offset overhead costs. Despite this strategy, Spiegel remarked that the bundle serves primarily as a “loss leader to capture and re-capture guests.” She added that when considering expenses for labor, packaging, condiments, delivery, and marketing, franchise owners often end up eliminating any potential profit from the meal deal.