McDonald’s is expected to generate a modest profit from its $5 meal deal, with profit margins estimated to be between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski indicated that the deal aims to attract cost-conscious consumers back to McDonald’s, with the hope that once inside, they will purchase additional items beyond the $5 meal. However, the potential for profit hinges on various factors including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the meal deal as “more promotional than profitable.” She noted that despite the initiative potentially drawing customers back to the restaurants, franchise owners may not see these profits directly. Approximately 95% of McDonald’s locations are franchisee owned, meaning individual owners set their own prices and must cover extra expenses such as rent, insurance, permits, and taxes.
In a statement from May, Joe Erlinger, McDonald’s U.S. president, acknowledged that franchisees often implement promotional deals to cope with overhead costs. Nonetheless, Spiegel emphasized that the meal bundle serves primarily as a “loss leader” designed to attract and retain customers. When considering additional costs—such as labor, packaging, condiments, delivery fees, and marketing—franchise owners often find that any potential profit related to the meal deal is effectively negated.