McDonald’s is anticipated to generate a profit from its $5 meal deal, but it is expected to be quite modest. According to restaurant analyst Mark Kalinowski, the profit margin for the combo meal is projected to be between 1% and 5%, which translates to earnings of roughly $0.05 to $0.25 for each meal sold.
Kalinowski noted that this deal is part of McDonald’s strategy to attract consumers who are feeling the pinch of inflation and encourage them to purchase more than just the $5 meal. However, achieving profitability will hinge on several factors, including the fluctuating costs of ingredients, labor, and other overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as being “more promotional than profitable.” She emphasized that while the combo deal may draw diners back to the restaurant, it does not guarantee that franchise owners will benefit financially. Approximately 95% of McDonald’s locations are franchisee-operated, meaning that individual owners have the autonomy to set their own pricing while managing increased costs such as rent, insurance, permits, and taxes.
Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often use promotional offers like the $5 meal deal to help offset overhead expenses. However, Spiegel remarked that the offer acts more as a “loss leader” aimed at attracting and retaining customers. Once various additional costs—including labor, packaging, condiments, delivery fees, and marketing—are taken into account, she stated that franchise owners often find that their profit margins are effectively wiped out, whether for individual items or the entire meal deal.