McDonald’s stands to generate a profit from its $5 meal deal, though it is expected to be quite modest. According to restaurant analyst Mark Kalinowski, the profit margin on this combo is projected to be between 1% and 5%, translating to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski noted that this meal deal is part of McDonald’s strategy to attract inflation-burdened consumers back into their restaurants. The company hopes that once customers are inside, they will be encouraged to purchase additional items beyond the $5 offering.
However, profitability will depend on various factors, including the costs associated with ingredients, labor, and operating expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.”
She also pointed out that although the deal might bring customers into the outlets, franchisees may not necessarily benefit from those profits. About 95% of McDonald’s locations are franchise-owned, meaning that individual owners set their own prices and deal with additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often try to offset those overhead costs by running promotions like the $5 meal deal. Nevertheless, Spiegel emphasized that this bundle serves more as a “loss leader” aimed at attracting and retaining customers.
Considering the added expenses of labor, packaging, condiments, delivery charges, and marketing, she concluded that franchise owners often end up eliminating any potential profit from the items included in the meal deal.