McDonald’s is expected to make a profit from its $5 meal deal, although it will likely be modest, ranging between 1% and 5%, which translates to approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
This promotion aims to attract inflation-weary customers back to the restaurant, with hopes that they will spend on additional items beyond the $5 offer. However, profitability will hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.” She noted that even though the offer may draw patrons to the outlets, it does not guarantee that franchisees will benefit from profits. Since approximately 95% of McDonald’s locations are franchise-owned, individual owners have the flexibility to set their own prices while managing additional expenses like rent, insurance, and taxes.
In May, Joe Erlinger, U.S. president of McDonald’s, mentioned that franchisees utilize promotional deals like the $5 meal to help manage overhead costs. Nevertheless, Spiegel pointed out that the bundle serves primarily as a “loss leader” aimed at attracting and retaining customers. Once factors such as labor, packaging, condiments, delivery charges, and marketing are taken into account, she indicated that owners effectively eliminate any potential profit from the items included in the deal.