McDonald’s may generate some profit from its $5 meal deal, although it is expected to be modest. According to restaurant analyst Mark Kalinowski, the fast-food chain is likely to see profit margins for this combination meal ranging from 1% to 5%, which translates to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski noted that the meal deal is part of McDonald’s strategy to attract inflation-weary consumers and encourage them to purchase additional items beyond the $5 offering. However, overall profitability will hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, remarked that the $5 meal deal is “more promotional than profitable.” She pointed out that even if the promotion draws customers back to the restaurant, it does not guarantee profits for franchisees, who own about 95% of McDonald’s locations. These franchise owners set their own prices and must manage additional costs such as rent, insurance, permits, and taxes.
In a statement made in May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often try to alleviate overhead expenses by offering promotional deals like the $5 meal. However, Spiegel indicated that this bundle acts more as a “loss leader to capture and re-capture guests.” She added that once the costs associated with labor, packaging, condiments, delivery, and marketing are considered, franchise owners effectively eliminate any potential profit from the items included in the deal.