McDonald’s is expected to earn a modest profit from its $5 meal deal, but the margin is likely to be low, ranging between 1% and 5%. This translates to a profit of about $0.05 to $0.25 for each meal bundle sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the promotion aims to attract consumers dealing with inflation, encouraging them to enter the restaurant and potentially purchase additional items beyond the $5 meal. However, profitability will hinge on various factors, including ingredient costs, labor, and other overhead expenses.
Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, characterized the $5 meal deal as “more promotional than profitable.” She emphasized that just because the deal may draw diners back doesn’t guarantee that franchise owners will see an increase in profits.
Approximately 95% of McDonald’s locations are franchise-owned, meaning that individual owners set their prices and must manage additional expenses like rent, insurance, permits, and taxes. In May, McDonald’s U.S. president, Joe Erlinger, mentioned that franchisees often use promotional offers like the $5 meal deal to manage such overhead costs.
Nevertheless, Spiegel highlighted that the bundle serves primarily as a “loss leader to capture and re-capture guests.” When considering extra costs such as labor, packaging, condiments, delivery, and marketing, she noted that franchise owners may end up erasing any potential profits from the deal.