McDonald’s is anticipated to generate a modest profit from its $5 meal deal, with expected profit margins ranging from 1% to 5%. This translates to earnings of approximately $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski.
Kalinowski indicated that this offering is part of McDonald’s strategy to attract consumers facing inflationary pressures back into their restaurants, with the hope that customers will purchase more than just the $5 meal. However, profitability will be influenced by various elements, including ingredient costs, labor expenses, and other overheads.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that even if the promotion successfully draws customers in, franchise owners may not benefit from the margins. With about 95% of McDonald’s locations operated by franchisees, individual owners have the discretion to set prices and must navigate extra costs such as rent, insurance, permits, and taxes.
In May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often aim to reduce overheads by implementing promotional offers like the $5 meal deal. Nonetheless, Spiegel characterized the bundle primarily as a “loss leader,” intended to attract and retain customers. She emphasized that after accounting for additional costs related to labor, packaging, condiments, delivery, and marketing, franchise owners could effectively eliminate any potential profits from the items included in the deal.