McDonald’s may see a small profit from its $5 meal deal, but it is expected to be minimal. According to restaurant analyst Mark Kalinowski, the profit margin on the combo is projected to be between 1% and 5%, translating to about $0.05 to $0.25 for each bundle sold.
Kalinowski noted that the meal deal is part of McDonald’s strategy to attract inflation-weary consumers back to its restaurants, with the hope that once customers are inside, they will purchase additional items beyond the $5 offer.
However, turning a profit will hinge on various factors, including the cost of ingredients, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Even if the combo manages to draw diners back to the restaurant, it does not guarantee that franchisees will benefit from the profits. Approximately 95% of McDonald’s locations are franchisee-owned, which means individual owners establish their own prices and bear extra costs such as rent, insurance, permits, and taxes.
In May, McDonald’s U.S. president Joe Erlinger stated that franchisees often try to offset their overhead costs by implementing promotional offers like the $5 meal deal. Nevertheless, Spiegel characterized the bundle primarily as a “loss leader” aimed at attracting and retaining customers. After accounting for additional expenses such as labor, packaging, condiments, delivery charges, and marketing, Spiegel indicated that franchise owners “essentially eliminate any profit” from the deal.