McDonald’s is expected to generate a modest profit from its $5 meal deal, with profit margins estimated to be between 1% and 5%, translating to a gain of approximately $0.05 to $0.25 per bundle sold, according to analyst Mark Kalinowski.
This meal deal is part of McDonald’s strategy to attract cost-conscious customers who are feeling the effects of inflation. The hope is that while diners come in for the $5 offering, they will make additional purchases.
Profitability will heavily depend on external factors like ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Despite the potential to draw customers back, franchisees might not see their profits increase as they are responsible for setting prices and managing expenses such as rent, insurance, and taxes.
In a previous statement, Joe Erlinger, president of McDonald’s U.S., noted that franchise owners often run promotional deals to help offset these overhead costs. However, Spiegel referred to the $5 meal deal as a “loss leader,” indicating it primarily serves to attract customers rather than directly generating profit.
When additional costs—including labor, packaging, condiments, delivery charges, and marketing—are included, she mentioned that franchisees may ultimately eliminate any actual profit from the meal deal.