McDonald’s aims to generate profit from its $5 meal deal, although the earnings are expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin on this combo meal is anticipated to be between 1% and 5%, equating to approximately $0.05 to $0.25 per bundle sold.
Kalinowski highlighted that this deal is part of McDonald’s strategy to attract inflation-weary customers, encouraging them to make additional purchases once they are in the restaurant. However, profitability will be influenced by various factors, including the prices of ingredients, labor costs, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that even if this combo succeeds in attracting more diners, it does not guarantee that franchise owners will see the benefits, given that around 95% of McDonald’s locations are franchisee-operated. This means that individual owners determine their pricing and must manage additional expenses like rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, indicated that franchisees often employ promotional strategies, such as the $5 meal deal, to alleviate overhead costs. Nonetheless, Spiegel emphasized that this deal acts more as a “loss leader” intended to attract and retain customers. After accounting for the costs associated with labor, packaging, condiments, delivery, and marketing, she stated that franchise owners often eliminate any potential profit from the items included in the deal.