McDonald’s could potentially see a modest profit from its $5 meal deal, with expectations of a profit margin ranging between 1% and 5%, equating to approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this promotional deal aims to attract inflation-weary consumers back to the restaurants, with the hope that they will purchase additional items beyond the $5 offer.
However, profitability will also hinge on various factors, including the rising costs of ingredients, 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 indicated that even if the meal deal successfully brings customers back in, franchise owners might not necessarily benefit from the profits. About 95% of McDonald’s locations are franchisee-owned, meaning that these owners set their own prices and must manage ongoing costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S. operations, mentioned that franchisees often implement promotional offers like the $5 meal deal to help offset overhead expenses. Nonetheless, Spiegel described the deal as more of a “loss leader” designed to attract and retain customers.
Once all additional costs are taken into account, including labor, packaging, condiments, delivery charges, and marketing, she concluded that franchise owners often end up erasing any potential profit from the deal.