McDonald’s may see some profit from its $5 meal deal, but it is expected to be quite limited. According to restaurant analyst Mark Kalinowski, the profit margin on this combo meal could range from 1% to 5%, which equates to approximately $0.05 to $0.25 earned for each bundle sold.
Kalinowski noted that this strategy aims to attract consumers who are sensitive to inflation, hoping that once they visit the restaurant, they will purchase additional items beyond the $5 deal. However, profitability will hinge on various factors, including the costs of ingredients, labor, and other operational expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She emphasized that even if the promotion draws diners back in, franchisees may not benefit from the profits gained. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners determine their own pricing and absorb additional costs like rent, insurance, permits, and taxes.
In a statement made in May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often use promotions, such as the $5 meal deal, to help offset overhead expenses. However, Spiegel pointed out that this bundle primarily serves as a “loss leader to capture and re-capture guests.” She added that when all the costs associated with labor, packaging, condiments, delivery, and marketing are considered, franchisees are likely to eliminate any potential profit from the deal.