McDonald’s is set to generate a modest profit from its recently launched $5 meal deal. According to restaurant analyst Mark Kalinowski, the fast food giant is expected to achieve a profit margin between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal bundle sold.
Kalinowski emphasized that this strategy aims to attract consumers feeling the pinch of inflation back into the restaurants, with the hope that once inside, they will purchase additional items beyond the $5 deal.
However, profitability will be influenced by various factors, including ingredient costs, labor, and overall overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the meal deal as “more promotional than profitable.” She noted that while the deal might encourage more customers to visit, it does not guarantee that franchisees will share in the profits.
Approximately 95% of McDonald’s outlets are franchise-operated, meaning these owners set their own prices and bear costs associated with rent, insurance, permits, and taxes. Earlier this year, McDonald’s U.S. president Joe Erlinger mentioned that franchisees utilize promotional offers like the $5 meal deal to manage overhead expenses.
Spiegel further explained that the meal deal serves more as a “loss leader” to attract and retain customers. After accounting for expenses related to labor, packaging, condiments, delivery, and marketing, she stated that franchise owners often “wipe out any profit” from the deal altogether.