McDonald’s is expected to realize a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to roughly $0.05 to $0.25 per bundle sold, as noted by restaurant analyst Mark Kalinowski.
Kalinowski explained that this promotional offer is part of McDonald’s strategy to attract inflation-weary consumers back into its restaurants, with the hope that visitors will purchase more than just the $5 meal.
However, profitability will also rely on several factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the $5 meal deal as being “more promotional than profitable.”
Spiegel cautioned that while the deal may entice diners, it does not necessarily guarantee profits for franchise owners. Approximately 95% of McDonald’s locations are franchisee-owned, meaning that individual owners set their prices and manage various expenses, including rent, insurance, permits, and taxes.
In statements made in May, McDonald’s U.S. president Joe Erlinger indicated that franchisees use promotional offers like the $5 meal deal to help manage overhead costs. However, Spiegel highlighted that the bundle serves primarily as a “loss leader” aimed at attracting and retaining customers. When the additional costs related to labor, packaging, condiments, delivery, and marketing are considered, she noted that franchise owners often end up erasing any potential profit from the deal.