McDonald’s is poised to generate a profit from its $5 meal deal, albeit a modest one, with profit margins estimated to be between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each meal combination sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the promotional deal is designed to draw inflation-weary consumers back into McDonald’s outlets, with the hope that customers will purchase additional items beyond the $5 offer. However, the profitability of the deal hinges on various factors, including the costs associated with ingredients, labor, and operational expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She pointed out that while the combo could attract diners to the chain, it does not guarantee that franchisees will benefit from the profits. Approximately 95% of McDonald’s locations are franchise-owned, meaning that individual owners establish their own pricing and manage expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, indicated that franchisees often implement promotional strategies—like the $5 meal deal—to help alleviate overhead costs. Nevertheless, Spiegel emphasized that the deal primarily serves as a “loss leader” to attract and retain customers, and when considering additional expenses related to labor, packaging, condiments, delivery, and marketing, franchise owners may effectively eliminate profits on the items included in the deal.