McDonald’s is expected to generate a profit from its $5 meal deal, although it will be minimal. According to restaurant analyst Mark Kalinowski, the chain is likely to have a profit margin on this combo ranging from 1% to 5%, translating to approximately $0.05 to $0.25 per meal sold.
Kalinowski noted that the meal deal is a strategy for McDonald’s to attract consumers who are feeling the pinch of inflation, with the hope that once customers are inside, they will purchase additional items beyond just the $5 meal.
However, profitability hinges on various factors, including ingredient costs, labor, and operational expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Moreover, even if the deal successfully draws customers in, franchise owners may not see the benefits. Approximately 95% of McDonald’s locations are operated by franchisees, who are responsible for their own pricing and must manage additional costs such as rent, insurance, permits, and taxes.
In comments made in May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often implement promotional offers like the $5 deal to offset their overhead expenses. Nevertheless, Spiegel emphasized that the meal bundle primarily acts as a “loss leader” aimed at attracting and retaining customers. Once expenses related to labor, packaging, condiments, delivery, and marketing are taken into account, she explained that franchise owners essentially lose any profit from the meal deal.