McDonald’s is expected to generate a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to about $0.05 to $0.25 for each bundle sold. Restaurant analyst Mark Kalinowski noted that this promotional strategy aims to attract inflation-affected consumers back to the restaurants, with the hope that customers will purchase additional items beyond the $5 offering.
However, achieving profitability will depend on various factors, including the costs of ingredients, labor, and overhead. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as being “more promotional than profitable.”
Moreover, even if this combo attracts diners, franchisees may not experience significant profits, as around 95% of McDonald’s locations are franchise-owned. Franchise owners set their own prices and manage various additional costs, such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., explained that franchisees often use promotional deals like the $5 meal to help offset their overhead costs. Nevertheless, Spiegel emphasized that the bundle primarily serves as a “loss leader to capture and re-capture guests.” She pointed out that once overhead expenses for labor, packaging, condiments, delivery, and marketing are considered, franchise owners might completely eliminate any potential profit from the deal.