McDonald’s anticipates a modest profit from its $5 meal deal, with expected profit margins ranging from 1% to 5%. This translates to approximately $0.05 to $0.25 per combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the $5 meal deal aims to attract consumers who are wary of inflation and encourages them to purchase more than just the discounted offering. However, overall profitability will hinge on factors such as ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, remarked that the $5 meal deal is “more promotional than profitable.” Even if the promotion successfully draws customers back to the restaurant, it does not guarantee that franchise owners will benefit financially.
Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners determine their pricing and manage additional expenses, including rent, insurance, and taxes. In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often use promotional deals like the $5 meal to offset overhead costs.
Spiegel emphasizes that the bundle serves more as a “loss leader” to attract and retain customers. After accounting for labor, packaging, condiments, delivery fees, and marketing expenses, franchisees may find that they effectively eliminate any profits from the items included in the deal.