McDonald’s may generate some profit from its $5 meal deal, but it is expected to be modest. Restaurant analyst Mark Kalinowski estimates the profit margin on the combo will range from 1% to 5%, translating to approximately $0.05 to $0.25 for each meal sold.
Kalinowski noted that the promotion aims to attract consumers weary of inflation back to McDonald’s, encouraging them to purchase additional items beyond the $5 deal. However, profitability will hinge on various factors including the costs of ingredients, labor, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She highlighted that while the combo might bring diners back, franchise owners may not see the financial return.
The vast majority of McDonald’s locations, around 95%, are franchisee-owned, meaning that individual owners determine pricing and bear responsibility for various additional expenses such as rent, insurance, permits, and taxes. In a statement from May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often implement promotional offers like the $5 meal to alleviate overhead costs.
Nevertheless, Spiegel asserted that the deal primarily serves as a “loss leader” aimed at attracting new customers. She pointed out that when one considers labor costs, packaging, condiments, delivery fees, and marketing, franchise owners “essentially eliminate any profit on any one or all of the items in the deal.”