McDonald’s may see a small profit margin from its $5 meal deal, though it is expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin on this combo is likely to range from 1% to 5%, translating to about $0.05 to $0.25 per meal sold.
Kalinowski noted that this deal aims to attract consumers who are feeling the effects of inflation, with the hope that they will purchase more items once they enter the restaurant. However, the ability to turn a profit will depend 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 explained that while it may bring customers back, franchisees might not benefit from the profits due to the structure of the business.
About 95% of McDonald’s locations are franchisee-owned, meaning the individual owners determine prices and must manage additional costs such as rent, insurance, permits, and taxes. McDonald’s U.S. president Joe Erlinger mentioned that franchisees often implement promotional offers to help offset these expenses.
Nevertheless, Spiegel emphasized that the $5 meal deal functions more as a “loss leader” to attract customers. After accounting for the costs associated with labor, packaging, condiments, delivery, and marketing, she indicated that owners may end up losing money on the items included in the deal.