McDonald’s is expected to generate a modest profit from its $5 meal deal, potentially ranging from 1% to 5%. This translates to approximately $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski. The fast-food giant aims to attract cost-conscious consumers amid rising inflation, hoping that once customers arrive, they will purchase additional items beyond the $5 offer.
However, the overall profitability of the meal deal is influenced by various factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.” She noted that while this initiative could increase foot traffic to the restaurants, it may not translate into substantial profits for franchise owners.
Approximately 95% of McDonald’s locations are franchise-owned, meaning that franchisees determine their own pricing while also managing extra expenses such as rent, insurance, permits, and taxes. In a statement made in May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often employ promotional offers like the $5 meal deal to lessen these overhead costs.
Spiegel described the bundle as a “loss leader” aimed at attracting and retaining customers. When accounting for additional costs such as labor, packaging, condiments, delivery charges, and marketing, she indicated that franchise owners may effectively eliminate their profit margin on the items included in the deal.