McDonald’s may achieve a profit from its $5 meal deal, but it is expected to be quite limited. According to restaurant analyst Mark Kalinowski, the profit margin for this offering is projected to be between 1% and 5%, which translates to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski noted that this deal is part of McDonald’s strategy to attract consumers who are feeling the pinch from inflation. The hope is that once customers enter the restaurant for the $5 meal, they will be encouraged to purchase additional items.
However, profitability will hinge on various factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She indicated that even if the deal draws diners back into the restaurant, franchisees might not benefit from the increased traffic.
Approximately 95% of McDonald’s locations are franchisee-operated, meaning these owners set their own prices and are responsible for additional costs such as rent, insurance, permits, and taxes. In a statement from May, Joe Erlinger, McDonald’s U.S. president, acknowledged that franchisees frequently use promotional offers, like the $5 meal deal, to help offset these overhead costs.
Spiegel emphasized that the bundle serves primarily as a “loss leader” to lure customers in. After accounting for labor, packaging, condiments, delivery expenses, and marketing, she stated that franchise owners “essentially eliminate any potential profit from any item in the deal.”