McDonald’s is set to introduce a $5 meal deal, which is expected to yield a modest profit margin estimated between 1% and 5%. According to restaurant analyst Mark Kalinowski, this translates to a profit of about $0.05 to $0.25 for each meal bundle sold. The company aims to attract consumers who are feeling the pinch of inflation, hoping that the appealing price will encourage additional purchases beyond the meal deal.
However, turning a profit with this offering will depend on several external factors including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal as “more promotional than profitable,” indicating that its primary purpose is to bring customers back into the store rather than significantly boost profitability.
Furthermore, while the deal might help draw diners in, franchise owners—who operate approximately 95% of McDonald’s locations—set their own prices and are responsible for various operating costs such as rent, insurance, permits, and taxes. In a recent statement, Joe Erlinger, the president of McDonald’s U.S., noted that franchisees often implement promotional deals like the $5 meal to help manage overhead expenses.
Spiegel remarked that once factors like labor, packaging, condiments, delivery fees, and marketing are considered, the added costs could effectively eliminate any potential profit from the bundled deal.