McDonald’s is anticipated to generate profits from its $5 meal deal, although these profits are expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin on this combo could range from 1% to 5%, equating to about $0.05 to $0.25 per bundle sold.
Kalinowski noted that the meal deal is a strategic move by McDonald’s to attract consumers who are feeling the pinch of inflation, with the hope that once they enter the restaurant, they will purchase more than just the $5 offer.
However, profitability will hinge on several factors, including the costs of ingredients, labor, and other overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Furthermore, even if the deal succeeds in bringing customers back into the restaurants, it does not guarantee that franchise owners will see the profits. Approximately 95% of McDonald’s locations are franchisee-owned, meaning these owners establish their own pricing and must manage additional expenses such as rent, insurance, and taxes.
In a statement made in May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often use promotional offers like the $5 meal deal to offset their overhead costs. Nonetheless, Spiegel asserted that this combo serves primarily as a “loss leader” aimed at attracting and retaining customers. After accounting for expenses related to labor, packaging, condiments, delivery, and marketing, she remarked that franchise owners may struggle to realize any profit from the items included in the deal.