McDonald’s may see a modest profit from its $5 meal deal, but it is expected to be limited. According to restaurant analyst Mark Kalinowski, the profit margin for this combo could range between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal sold.
Kalinowski noted that the meal deal is an attempt by McDonald’s to attract customers affected by inflation, hoping they will purchase more than just the $5 meal once inside the restaurant. However, profitability will also depend on various factors, including ingredient costs, labor, and other overhead expenses.
Consulting firm president Arlene Spiegel described the $5 meal deal as “more promotional than profitable.” She pointed out that the deal might bring customers back, but that doesn’t guarantee profits for franchisees. Approximately 95% of McDonald’s locations are franchise-owned, meaning franchisees set their own prices and deal with additional expenses like rent, insurance, and permits.
In May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees manage their overhead by implementing promotional deals, such as the $5 meal. Nevertheless, Spiegel commented that the bundle acts as a “loss leader” to attract guests. When considering extra costs like labor, packaging, condiments, delivery, and marketing, franchise owners might “wipe out any profit” on the items included in the deal.