McDonald’s may find a slight profit from its $5 meal deal, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin on the combo could range between 1% and 5%, translating to a profit of approximately $0.05 to $0.25 for each bundle sold.
Kalinowski mentioned that this initiative is part of McDonald’s strategy to attract inflation-weary consumers back into its restaurants, encouraging them to purchase more than just the $5 option. However, the ability to turn a profit will hinge on several factors, including ingredient costs, labor expenses, and overhead.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, indicated that the $5 meal deal is more about promotion than profitability. She noted that even if the deal manages to bring customers back, it does not guarantee that franchise owners will see the financial gains.
Approximately 95% of McDonald’s locations are franchise-owned, which means that individual owners determine their prices and must manage extra costs such as rent, insurance, permits, and taxes. McDonald’s U.S. president Joe Erlinger stated that franchisees often offer promotional deals like the $5 meal to help offset those overhead expenses.
However, Spiegel remarked that the deal functions primarily as a “loss leader” designed to attract customers. Once extra costs related to labor, packaging, condiments, delivery, and marketing are taken into account, she asserted that franchise owners often end up erasing any potential profit from the items included in the promotional deal.