McDonald’s is expected to see modest profits from its $5 meal deal, with profit margins projected to be between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
Kalinowski notes that this promotion aims to attract inflation-weary consumers back to the restaurant, encouraging them to purchase more than just the $5 meal. However, the potential profitability of the deal hinges 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 emphasized that while the offering might draw diners back, it may not translate into profits for franchisees. Approximately 95% of McDonald’s outlets are franchise-owned, meaning individual owners set their own prices and manage additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., highlighted that franchisees aim to reduce overhead by launching promotional deals like the $5 meal. Nevertheless, Spiegel explained that such a bundle tends to act as a “loss leader” to attract and retain customers. She pointed out that once costs for labor, packaging, condiments, delivery, and marketing are considered, franchise owners often end up losing out on profits from items included in the deal.