McDonald’s is anticipated to achieve a modest profit from its $5 meal deal, with profit margins ranging between 1% and 5%. According to restaurant analyst Mark Kalinowski, this translates to earnings of approximately $0.05 to $0.25 per bundle sold.
Kalinowski noted that the promotional deal is designed to entice consumers feeling the pinch of inflation to visit the restaurant, with the hope that they will also make additional purchases beyond the $5 meal.
However, actual profitability hinges on various factors, including ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.”
Despite encouraging patrons to return to McDonald’s, there is no guarantee that franchise owners will see increased profits from the deal. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners set their prices and manage extra costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, the U.S. president of McDonald’s, mentioned that franchisees often use promotional offers like the $5 meal deal to offset their overhead costs. Nonetheless, Spiegel emphasized that the meal deal primarily serves as a “loss leader” aimed at attracting customers. Once additional expenses such as labor, packaging, condiments, delivery, and marketing are accounted for, franchise owners may find their profits significantly diminished from any of the items included in the deal.