McDonald’s is projected to make a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to a profit of about $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
This initiative aims to attract inflation-weary customers back into stores, encouraging them to purchase more than just the $5 combo. However, overall profitability will hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, noted that the $5 meal deal serves more as a promotional tactic than a significant profit generator. She emphasized that even if the promotion brings customers into the restaurant, franchisees might not see those profits.
Approximately 95% of McDonald’s restaurants are franchisee-owned, meaning owners determine their own pricing while managing additional costs, such as rent, insurance, permits, and taxes. In a statement from May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees utilize promotional deals, like the $5 meal, to help minimize these overheads.
Regardless, Spiegel classified the meal deal as a “loss leader,” designed to attract and retain customers. Once costs associated with labor, packaging, condiments, delivery, and marketing are accounted for, she indicated that restaurant owners generally forfeit any profit on the items included in the promotion.