McDonald’s is expected to make a small profit from its $5 meal deal, with profit margins projected between 1% and 5%, translating to roughly $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski. The promotion aims to attract consumers who are feeling the strain of inflation and encourage them to purchase more than just the $5 meal.
However, profitability is contingent on several factors such as ingredient costs, labor, and overall overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, noted that the $5 meal deal is more of a promotional strategy than a significant profit generator.
While the deal may increase customer foot traffic, it may not necessarily benefit the franchisees directly. About 95% of McDonald’s locations are franchisee-owned, meaning these owners determine their own pricing and bear added costs such as rent, insurance, permits, and taxes. Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often use promotional offers like the $5 meal deal to help manage these overhead costs.
Spiegel emphasized that the bundle serves as a “loss leader” designed to attract and retain customers. After accounting for the expenses associated with labor, packaging, condiments, delivery charges, and marketing, she remarked that franchise owners effectively eliminate any potential profit from the items included in the deal.