McDonald’s is expected to make only a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this promotional offer aims to attract inflation-strained consumers back to the restaurant, with hopes that they will spend more than just the $5 on the combo. However, profitability will hinge on various factors, including the costs of ingredients, labor, and overall overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, remarked that the $5 meal deal is primarily “more promotional than profitable.” She added that although the combo could entice diners, it’s not guaranteed that franchise owners will see the profits, as approximately 95% of McDonald’s locations operate under franchise agreements. This means that franchisees set their own pricing and manage additional costs such as rent, insurance, permits, and taxes.
In a statement, Joe Erlinger, president of McDonald’s U.S., explained that franchisees often utilize promotional deals like the $5 meal to help alleviate overhead costs. However, Spiegel emphasized that the bundle serves as a “loss leader” aimed at enticing customers back. Once factors like labor, packaging, condiments, delivery charges, and marketing expenses are considered, she concluded that owners effectively eliminate any potential profit from the deal.