McDonald’s is anticipated to see a small profit from its $5 meal deal, with profit margins estimated to be between 1% and 5%, translating to a gain of approximately $0.05 to $0.25 per bundle sold, according to analyst Mark Kalinowski.
This promotion aims to draw inflation-weary consumers back to the restaurant, with the intention of encouraging them to purchase more than just the $5 meal. However, profitability will be influenced by 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 noted that even if the offer brings customers into the restaurant, franchisees might not necessarily benefit financially.
Approximately 95% of McDonald’s locations are franchise-operated, meaning individual owners can set their prices and must manage additional costs such as rent, insurance, permits, and taxes.
In a statement from May, Joe Erlinger, McDonald’s U.S. president, explained that franchisees often use promotional strategies like the $5 meal to offset overhead costs. However, Spiegel emphasized that the bundle acts more like a “loss leader meant to attract and retain customers.” When considering additional expenses like labor, packaging, condiments, delivery fees, and marketing, she indicated that franchise owners could effectively eliminate any profit from this deal.