McDonald’s $5 meal deal may generate some profit, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the fast-food chain may see profit margins between 1% to 5%, translating to approximately $0.05 to $0.25 for each meal sold. This strategy is aimed at attracting consumers who are feeling the pinch of inflation, with the hope that customers will buy more than just the discounted meal.
However, profit generation will depend on various factors, including ingredient costs, labor, and operational expenses. Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She indicated that while the offer might draw customers into the restaurants, it doesn’t ensure that franchise owners will see a share of the profits.
About 95% of McDonald’s locations are franchise-owned, meaning individual owners determine their prices and must manage additional costs such as rent, insurance, permits, and taxes. In a statement, Joe Erlinger, the president of McDonald’s U.S., mentioned that franchisees often run promotional deals like the $5 meal to help alleviate overhead costs. Nonetheless, Spiegel stated that the deal serves primarily as a “loss leader” intended to attract customers. Once factors like labor, packaging, condiments, delivery fees, and marketing costs are considered, she noted that franchise owners may effectively eliminate any potential profit from the meal deal.