McDonald’s is poised to see a modest profit from its $5 meal deal, with expected margins between 1% and 5%, translating to approximately $0.05 to $0.25 per combo sold, according to restaurant analyst Mark Kalinowski.
This initiative is part of McDonald’s strategy to attract inflation-weary consumers back into their restaurants, with hopes that once inside, customers will purchase more than just the $5 meal.
However, achieving profitability will depend on several factors, including ingredient costs, labor, and other overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.”
Although the deal could bring diners back, franchisees may not share in the profits, as approximately 95% of McDonald’s locations are franchise-operated. Franchise owners determine their own pricing and must manage additional expenses such as rent, insurance, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., noted that franchisees often use promotional offers like the $5 meal to offset their overhead costs. However, Spiegel described the bundle as a “loss leader,” designed to attract and retain customers.
When considering the overall costs, including labor, packaging, condiments, delivery, and marketing, she indicated that franchise owners likely negate any profits from the deal.