McDonald’s might make a modest profit from its $5 meal deal, but the margins are expected to be slim. According to restaurant analyst Mark Kalinowski, the profit margin for this combo meal will likely be between 1% and 5%. This translates to a profit of approximately $0.05 to $0.25 for each bundle sold.
Kalinowski noted that the promotion is part of McDonald’s strategy to attract consumers feeling the pinch of inflation. The hope is that once customers come in for the $5 deal, they will be tempted to purchase additional items.
However, the profit potential hinges on several factors including the costs of ingredients, labor, and overhead. Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
She emphasized that even if the combo draws customers back, franchise owners may not experience corresponding profits. Approximately 95% of McDonald’s locations are franchisee-operated, meaning that individual owners set their own prices and manage various expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S. division, mentioned that franchisees use promotional deals like the $5 meal to manage overhead costs. However, Spiegel argued that the deal acts more as a “loss leader” aimed at attracting and retaining customers. After accounting for additional expenses related to labor, packaging, condiments, delivery, and marketing, she indicated that franchise owners often lose any potential profit from the items included in the meal deal.