McDonald’s is facing its first lawsuit related to the E. coli outbreak linked to its Quarter Pounder burger. This comes as the fast-food chain offers a $5 meal deal aimed at attracting customers who are struggling with inflation. Although the deal is expected to generate some profits, restaurant analyst Mark Kalinowski projects that the profit margin will be modest, ranging from 1% to 5%, translating to about $0.05 to $0.25 per meal sold.
Kalinowski indicated that while this offering may entice customers back, the real goal is to encourage them to purchase more than just the discounted meal. However, the profitability of the meal deal will largely depend on various factors, including ingredient costs, labor, and overhead expenses.
Consultant Arlene Spiegel pointed out that the $5 meal deal is “more promotional than profitable.” She noted that while getting customers back through the door is important, the profits may not reach the franchise owners. Approximately 95% of McDonald’s locations are franchise-owned, meaning that these owners set their own prices and must absorb additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often use promotional offers, like the $5 meal deal, to manage overhead costs. However, Spiegel characterized the offering as a “loss leader” intended to attract and retain customers. Once all associated costs—such as labor, packaging, condiments, delivery fees, and marketing—are considered, she stated that franchise owners could effectively lose any profit from the items in the deal.