McDonald’s is expected to make a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 for each bundle sold, as noted by restaurant analyst Mark Kalinowski. The initiative aims to attract consumers facing inflation, encouraging them to make additional purchases beyond the $5 offering.
However, profitability will hinge on various factors, including ingredient costs, labor expenses, and overhead costs. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She explained that while the deal may increase foot traffic in restaurants, it does not guarantee profits for franchisees.
With around 95% of McDonald’s locations being franchise-owned, individual owners determine their pricing and must account for additional costs, such as rent, insurance, permits, and taxes. In May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees use promotional offers to help mitigate overhead expenses, including the $5 meal deal.
Despite this strategy, Spiegel emphasized that the deal serves primarily as a “loss leader to capture and re-capture guests.” When factoring in the costs of labor, packaging, condiments, delivery, and marketing, franchise owners often find that they do not profit from the promotion.