McDonald’s is anticipated to generate a modest profit from its $5 meal deal, with margins expected to fall between 1% and 5%. This translates to an estimated profit of $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski pointed out that the deal is part of McDonald’s strategy to attract inflation-stricken consumers back to its locations, with the hope that once customers are inside, they will purchase additional items beyond the $5 meal.
However, the actual profit from these deals hinges on various factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of a consulting firm, described the $5 meal deal as “more promotional than profitable.”
Spiegel noted that while this offer may entice diners to return, it does not necessarily translate to increased profits for franchisees. Approximately 95% of McDonald’s locations are franchisee-owned, meaning individual owners establish their own prices and bear the burden of extra costs such as rent, insurance, permits, and taxes.
In a statement made in May, McDonald’s U.S. president Joe Erlinger explained that franchisees often utilize promotional deals like the $5 meal to manage their overhead costs. Still, Spiegel emphasized that the meal deal serves more as a “loss leader” aimed at attracting and retaining customers. With the additional expenses associated with labor, packaging, condiments, delivery, and marketing factored in, she remarked that owners may completely eliminate any profit from the items included in the deal.