McDonald’s appears set to generate a profit from its $5 meal deal, although it is expected to be modest. According to restaurant analyst Mark Kalinowski, the fast-food chain’s profit margin on the combo meal is estimated to be between 1% and 5%, translating to around $0.05 to $0.25 for each bundle sold.
Kalinowski noted that this deal aims to attract inflation-weary customers back to the restaurant, with the hope that diners will purchase more than just the $5 offering once they are inside. However, profitability will also hinge on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She pointed out that even if the combo successfully draws customers back, it does not guarantee that franchisees will see profits.
Approximately 95% of McDonald’s locations are franchise-operated, meaning that individual owners establish their own pricing and must manage additional costs such as rent, insurance, permits, and taxes. In May, Joe Erlinger, president of McDonald’s U.S., stated that franchisees often use promotional offers like the $5 meal deal to help offset these overhead expenses.
Nevertheless, Spiegel emphasized that the meal deal primarily serves as a “loss leader to capture and recapture guests.” Once accounting for the added costs associated with labor, packaging, condiments, delivery, and marketing, she stated that owners effectively eliminate any potential profit from the items included in the deal.