McDonald’s may generate a modest profit from its $5 meal deal, with profit margins expected to range between 1% and 5%, translating to approximately $0.05 to $0.25 for each combo sold, as stated by restaurant analyst Mark Kalinowski.
According to Kalinowski, the promotion aims to attract consumers who are feeling the pinch of inflation in hopes that they will purchase more than just the $5 meal once inside the restaurant. However, profitability will hinge on various factors, including the costs of ingredients, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is meant to be “more promotional than profitable.” Even if it manages to draw customers back to the restaurant, it may not necessarily lead to increased profits for franchise owners.
Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners establish their own pricing and must manage extra expenses such as rent, insurance, permits, and taxes. In a statement made in May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often use promotional options like the $5 meal to offset these overhead costs.
However, Spiegel described the combo as largely a “loss leader” strategy designed to attract and retain customers. Once accounting for added expenses like labor, packaging, condiments, delivery fees, and marketing, she remarked that franchise owners may effectively eliminate profits on the meal deals.