McDonald’s may generate a profit from its $5 meal deal, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin for the combo meal is projected to be between 1% and 5%, translating to approximately $0.05 to $0.25 for each sale.
Kalinowski noted that the deal aims to attract cost-conscious customers amid rising inflation, encouraging them to make additional purchases beyond the $5 meal. However, profitability will depend on various factors, including the costs of ingredients, labor, and overhead.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, remarked that while the offer may increase foot traffic to McDonald’s locations, it may not significantly benefit franchise owners, who operate around 95% of McDonald’s restaurants. These franchisees set their own prices and manage expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., stated that franchisees frequently implement promotional offers, like the $5 meal deal, to help manage overhead costs. Despite this, Spiegel described the combo as primarily a “loss leader” designed to attract and retain customers. She explained that when factoring in costs associated with labor, packaging, condiments, delivery, and marketing, franchise owners may effectively eliminate any potential profit from the deal.