McDonald’s may achieve a profit from its $5 meal deal, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the fast food chain anticipates a profit margin on the combo to range from 1% to 5%, translating to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski explained that this meal deal is designed to attract inflation-weary consumers back to the restaurant, encouraging them to purchase more than just the $5 option once they are inside. However, profitability will be influenced by various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that even with the potential to draw customers back, the profits may not benefit franchisees directly. Since about 95% of McDonald’s locations are franchise-owned, individual owners set prices and manage their own expenses, including rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often attempt to manage these overheads by offering promotional deals, such as the $5 meal. However, Spiegel remarked that the bundle functions more as a “loss leader” aimed at attracting and retaining customers. After accounting for additional costs like labor, packaging, condiments, delivery charges, and marketing, she stated that franchise owners could end up eliminating any potential profits from the items in the deal.