McDonald’s is likely to earn a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each combo sold, as stated by restaurant analyst Mark Kalinowski.
Kalinowski suggests that the promotion aims to attract inflation-weary customers back to the restaurants, with the hope that they will purchase additional items beyond the $5 deal. However, profits will largely depend on factors such as ingredient costs, labor expenses, and overhead.
Consulting firm president Arlene Spiegel noted that the $5 meal deal is more focused on drawing in customers than on generating significant profit. Despite the potential to bring diners back, franchise owners may not experience those profits directly since approximately 95% of McDonald’s locations are franchise-operated. These owners are responsible for determining their pricing and handling various costs, including rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees use promotional offers like the $5 meal deal to help manage overhead costs. Nevertheless, Spiegel emphasized that this type of deal acts more as a “loss leader” to attract and maintain customer traffic. Once additional costs related to labor, packaging, condiments, delivery, and marketing are included, franchise owners often find that any potential profits from the deal are essentially negated.