McDonald’s may see a modest profit from its $5 meal deal, with estimates indicating a profit margin between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
This promotional offer is part of McDonald’s strategy to attract inflation-weary consumers back to their stores, with the hope that once inside, customers will purchase additional items beyond the $5 deal.
However, profitability will hinge on several factors, including the rising costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, noted that while the deal is intended to draw customers, it may be “more promotional than profitable.”
Approximately 95% of McDonald’s outlets are owned by franchisees, who set their own prices and must manage various expenses like rent, insurance, permits, and taxes. In May, Joe Erlinger, president of McDonald’s U.S. division, mentioned that franchisees often implement promotional deals to offset such overhead costs.
Spiegel remarked that the $5 meal deal functions more as a “loss leader” aimed at attracting and retaining customers. Additionally, she pointed out that once owners account for the costs of labor, packaging, condiments, delivery, and marketing, they often lose any potential profit from the items included in the deal.