McDonald’s may generate a profit from its $5 meal deal, but the earnings are expected to be minimal. Restaurant analyst Mark Kalinowski estimates the profit margin on the combo to be between 1% and 5%, translating to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski notes that this deal is part of McDonald’s strategy to attract inflation-conscious consumers back to their restaurants, with hopes that customers will then purchase additional items beyond the $5 offer.
However, the ability to turn a profit on this deal hinges on several factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the meal deal as “more promotional than profitable.”
Even if the promotion draws diners back to McDonald’s, franchisees might not see the benefits. Approximately 95% of McDonald’s locations are franchise-owned, meaning that individual owners set prices and manage additional costs like rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often implement promo offers like the $5 meal deal to offset overhead expenses. Spiegel emphasized that the bundle serves more as a “loss leader” aimed at attracting customers. Once the extra costs of labor, packaging, condiments, delivery, and marketing are accounted for, she stated that franchise owners could effectively eliminate any profit from the items in the deal.