McDonald’s is set to benefit modestly from its $5 meal deal, with projected profit margins ranging between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
This initiative aims to attract cost-conscious consumers back to the fast-food chain and encourage them to purchase additional items beyond the $5 meal. However, the overall profitability hinges on fluctuating factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the deal as “more promotional than profitable.” She noted that while the meal deal may successfully draw diners into restaurants, franchise owners may not necessarily see corresponding profits. Approximately 95% of McDonald’s locations are franchise-owned, meaning these franchisees set their prices and cover extra expenses such as rent, insurance, permits, and taxes.
Joe Erlinger, McDonald’s president for the U.S., previously stated that franchisees utilize promotional offerings like the $5 meal deal to manage overhead costs. Still, Spiegel cautioned that the deal functions more as a “loss leader” aimed at attracting and retaining customers. After accounting for additional expenses related to labor, packaging, condiments, delivery, and marketing, franchise owners may find that profits on the meal deal are effectively eliminated.