McDonald’s may see a slight profit from its $5 meal deal, although the margin will be modest. According to restaurant analyst Mark Kalinowski, the profit margin for this combo is expected to range from 1% to 5%, translating to about $0.05 to $0.25 per bundle sold.
Kalinowski noted that this meal deal is a strategy to entice inflation-weary customers to return to its restaurants, with the hope that once they are inside, they will purchase additional items beyond the $5 option.
However, actual profitability will depend on various factors including the cost of ingredients, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Furthermore, while the promotion may attract diners, it does not guarantee profits for franchise owners, who operate about 95% of McDonald’s locations and set their own prices. They face additional expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often run promotional offers like the $5 meal deal to help offset these overhead costs. However, Spiegel emphasized that this deal acts more as a “loss leader” designed to bring customers in and encourage repeat visits. Once owners account for labor, packaging, condiments, delivery charges, and marketing expenses, they may eliminate any potential profit from the items included in the deal.