McDonald’s is expected to earn a modest profit from its $5 meal deal, with profit margins projected to range between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this meal deal aims to attract inflation-weary customers back to the fast-food chain, encouraging them to purchase more than just the $5 combo while they are in the restaurant.
However, profitability will be influenced by various factors, including ingredient costs, labor expenses, and overhead costs. Arlene Spiegel, president of Arlene Spiegel & Associates, pointed out that the $5 meal deal is “more promotional than profitable.”
While the combo may succeed in drawing diners back, Spiegel cautioned that franchise owners may not see significant profits from it. Since approximately 95% of McDonald’s locations are franchise-owned, individual owners establish their own prices and must manage additional expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s USA, mentioned that franchisees often implement promotional deals like the $5 meal to help offset these overhead costs. Nevertheless, Spiegel described the meal bundle as a “loss leader” designed to attract and retain customers. She stated that when accounting for labor, packaging, condiments, delivery charges, and marketing costs, franchise owners effectively eliminate any potential profits from the items included in the deal.