McDonald’s may generate some profit from its $5 meal deal, although the earnings are expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin for this combo could range between 1% and 5%, translating to approximately $0.05 to $0.25 for each meal sold.
This value meal is part of McDonald’s strategy to attract consumers affected by inflation and encourage them to purchase more items beyond the $5 offer. However, profitability will hinge on several variables, including the costs of ingredients, labor, and other overheads.
Arlene Spiegel, president of Arlene Spiegel & Associates, highlighted that the $5 meal deal is “more promotional than profitable.” She noted that, despite bringing customers back into the restaurants, it does not guarantee profits for franchisees. With around 95% of McDonald’s locations being franchisee-owned, these owners set their own pricing and must cover additional expenses such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s USA, mentioned that franchisees use promotional strategies like the $5 meal deal to help offset these overhead costs. Nevertheless, Spiegel remarked that the deal ultimately acts as a “loss leader” aimed at attracting and retaining customers. Once labor, packaging, condiment, delivery, and marketing costs are taken into account, she stated that owners often eliminate any potential profit from the items included in the deal.