McDonald’s may generate some profit from its $5 meal deal, though the earnings are expected to be modest. Restaurant analyst Mark Kalinowski estimates that the profit margin for the combo meal could range from 1% to 5%, translating to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski noted that this deal is part of McDonald’s strategy to attract inflation-weary customers back into their restaurants, encouraging them to purchase more items beyond just the $5 offering. However, achieving profitability will rely on several factors, including ingredient costs, labor expenses, and overall overhead.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, referred to the $5 meal deal as “more promotional than profitable.” She pointed out that even if the meal deal draws diners back, franchise owners may not see those profits directly.
Approximately 95% of McDonald’s locations are franchise-owned, which means that franchisees determine their prices and manage additional expenses such as rent, insurance, permits, and taxes. In May, Joe Erlinger, the U.S. president of McDonald’s, mentioned that franchisees often attempt to alleviate overhead costs by offering promotions like the $5 meal.
However, Spiegel characterized the bundle as a “loss leader” intended to attract and retain customers. She added that when considerations such as labor, packaging, condiments, delivery charges, and marketing are taken into account, franchise owners often find that they “basically wipe out any profit” on these deals.