McDonald’s is poised to earn some profit from its $5 meal deal, although it will be fairly limited. According to restaurant analyst Mark Kalinowski, the profit margin on this combo meal is expected to be between 1% and 5%, which translates to about $0.05 to $0.25 for each meal sold.
Kalinowski noted that this promotion aims to attract price-sensitive consumers back to McDonald’s, encouraging them to purchase more than just the $5 option once they are inside the restaurant. However, actual profitability will hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She pointed out that even if the meal draws customers back, franchisees may not necessarily benefit from the profits. With around 95% of McDonald’s locations operated by franchisees, these owners set their own pricing and bear additional expenses like rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees try to offset these overheads by launching promotional offers such as the $5 meal deal. However, Spiegel emphasized that the bundle acts more as a “loss leader” intended to attract and retain customers. When considering factors like labor, packaging, condiments, delivery charges, and marketing costs, she stated that owners could end up eliminating any potential profit from this deal.