McDonald’s is expected to achieve a modest profit from its $5 meal deal, with profit margins projected to be between 1% and 5%, equating to approximately $0.05 to $0.25 for each meal sold, as noted by restaurant analyst Mark Kalinowski.
This pricing strategy aims to attract consumers facing inflation who may have reduced dining out. However, the potential profitability of this deal relies heavily on various factors, including the cost of ingredients, labor, and overall overhead expenses.
Kalinowski describes the $5 meal deal as primarily promotional rather than a significant profit driver. Even if this initiative successfully draws customers back to the restaurant, franchise owners may not see these benefits directly. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners set their own prices and must manage additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often run promotional offers like the $5 meal deal to help offset those overhead costs. Nevertheless, Arlene Spiegel, president of Arlene Spiegel & Associates, indicated that the deal serves more as a “loss leader” intended to attract customers rather than as a reliable profit source. She emphasized that the associated costs for labor, packaging, condiments, delivery, and marketing often erode any potential profits from the meal deal.