McDonald’s is expected to see only a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
The initiative aims to attract inflation-weary consumers back into their restaurants, with the hope that customers will also purchase additional items beyond the $5 offering. However, the actual profitability of this deal will depend on various factors, including the costs of ingredients, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that while it may entice diners through the doors, it doesn’t guarantee profits for franchise owners, who make up about 95% of McDonald’s locations and operate independently, setting their own prices while managing costs like rent and insurance.
In May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often use promotional campaigns like the $5 meal deal to help control overhead costs. Nevertheless, Spiegel remarked that the bundle primarily serves as a “loss leader” to attract and retain customers. Once accounting for additional expenses such as labor, packaging, condiments, delivery fees, and marketing, franchise owners may ultimately find little to no profit from the deal.