McDonald’s may gain a modest profit from its $5 meal deal, with profit margins expected to be between 1% and 5%, translating to approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the meal deal is part of McDonald’s strategy to attract consumers feeling the pinch of inflation, encouraging them to make additional purchases beyond the $5 offering.
However, profitability will also hinge on numerous factors, including the costs of ingredients, labor, and other overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.” She stated that while the deal may draw diners back into the restaurant, franchise owners may not see those profits.
Approximately 95% of McDonald’s locations are franchise-owned, meaning owners set their own prices and bear various costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often reduce overhead by introducing promotional offers like the $5 meal deal.
Despite this, Spiegel explained that the combo is primarily a “loss leader” designed to attract and retain customers. Once additional costs related to labor, packaging, condiments, delivery fees, and marketing are considered, franchise owners effectively eliminate any potential profit on the deal’s components.