McDonald’s is expected to achieve a modest profit from its $5 meal deal, with profit margins estimated to be between 1% and 5%. This translates to approximately $0.05 to $0.25 earned for each bundle sold, according to restaurant analyst Mark Kalinowski. The fast-food giant aims to attract consumers who are feeling the pinch of inflation and hopes that once customers are drawn in, they might purchase additional items beyond the $5 offering.
However, the overall profitability of the meal deal hinges on several factors, including ingredient costs, labor, and operating expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, emphasizes that the $5 meal deal is more of a promotional effort than a significant profit generator.
She pointed out that while the combo may help draw diners back into the restaurants, franchise owners may not see the financial benefits, as approximately 95% of McDonald’s locations are franchisee-owned. These franchisees set their own prices and bear the burden of additional costs such as rent, insurance, permits, and taxes.
Joe Erlinger, president of McDonald’s USA, noted that franchisees often respond to overhead costs by offering promotions like the $5 meal deal. Nevertheless, Spiegel classifies this bundle as a “loss leader” designed to attract and retain customers. When accounting for additional expenses like labor, packaging, condiments, delivery fees, and marketing, she indicates that franchise owners effectively eliminate any profit from the items included in the deal.