McDonald’s is poised to achieve a profit from its $5 meal deal, although the gain is expected to be minimal. According to restaurant analyst Mark Kalinowski, the profit margin on the meal combo may range between 1% and 5%, translating to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski indicated that this promotional strategy is aimed at enticing inflation-exhausted consumers to return to the restaurant, with the hope that they will purchase additional items beyond the $5 offer.
However, achieving profitability hinges on several factors, including ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.”
While the deal may bring diners back into the establishment, it does not guarantee that franchisees will benefit from the profits, as approximately 95% of McDonald’s locations are franchisee-owned. This means that franchise owners set their own prices and must manage added expenses such as rent, insurance, permits, and taxes.
Joe Erlinger, McDonald’s U.S. president, mentioned in May that franchisees often address these overhead costs by implementing promotional offers like the $5 meal deal. Nevertheless, Spiegel described the bundle as primarily a “loss leader to capture and re-capture guests.” She noted that when additional costs related to labor, packaging, condiments, delivery, and marketing are considered, franchise owners “essentially eliminate any profit” from the items included in the deal.