McDonald’s is expected to achieve a modest profit margin from its $5 meal deal, ranging between 1% and 5%. This translates to approximately $0.05 to $0.25 earned on each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the deal is designed to attract consumers facing inflation and encourage them to purchase more than just the $5 combo. However, overall profitability will hinge 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 even if the offer successfully draws customers back into the restaurants, franchise owners may not directly benefit from the profits.
Around 95% of McDonald’s locations are franchise-owned, meaning individual owners set their own prices and navigate additional expenses like rent, insurance, permits, and taxes. In a statement from May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often use promotions, such as the $5 meal deal, to offset overhead costs.
Spiegel further explained that the bundle serves as a “loss leader” to attract customers and retain their loyalty. When accounting for labor, packaging, condiments, delivery fees, and marketing expenses, franchise owners are likely to find that any potential profits from the meal deal are significantly diminished.