McDonald’s is set to generate a modest profit from its $5 meal deal, with expected profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 per combo sold, according to restaurant analyst Mark Kalinowski.
This meal deal is part of McDonald’s strategy to attract inflation-weary customers back to their restaurants, with the hope that patrons will spend more than just the $5 for the combo. However, the overall profitability of this deal hinges on several factors, including the costs of ingredients, labor, and operational expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.” She explained that even if this offer draws customers into the restaurants, franchisees may not benefit directly from those profits.
With 95% of McDonald’s locations being franchisee-owned, individual owners set their own pricing and must account for additional expenses such as rent, insurance, permits, and taxes. McDonald’s U.S. president Joe Erlinger previously noted that franchisees often offer promotions like the $5 meal deal to help offset these overhead costs.
Nonetheless, Spiegel emphasized that the meal bundle primarily serves as a “loss leader” to attract and retain customers. Once the extra costs related to labor, packaging, condiments, delivery fees, and marketing are considered, she noted that owners could see their profits essentially eliminated across the deal.