McDonald’s is anticipated to achieve only a modest profit from its $5 meal deal, with profit margins expected to range between 1% and 5%. This equates to approximately $0.05 to $0.25 for each meal sold, as indicated by restaurant analyst Mark Kalinowski.
The fast-food giant hopes that this promotion will attract consumers who are struggling with inflation, encouraging them to enter the restaurant and purchase additional items beyond the $5 meal. However, the profitability of this deal is contingent upon various factors, including the costs of ingredients, labor, and overhead.
Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is likely “more promotional than profitable.” She pointed out that while the promotion may draw diners back, franchise owners may not see significant profits since about 95% of McDonald’s locations are franchise-owned. Franchisees are responsible for setting their own prices and must manage additional expenses like rent, insurance, permits, and taxes.
In a statement made in May, Joe Erlinger, the president of McDonald’s U.S., explained that franchisees often employ promotions like the $5 meal deal to help offset overhead costs. However, Spiegel remarked that the bundle acts primarily as a “loss leader,” aiming to attract and retain customers. She emphasized that once all additional costs—such as labor, packaging, condiments, delivery fees, and marketing—are taken into account, franchise owners may forfeit nearly all potential profits from the deal.