McDonald’s is anticipated to generate a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, equivalent to roughly $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
This promotional effort aims to attract inflation-burdened consumers back to the restaurant, encouraging them to purchase additional items beyond the $5 offer. However, the actual profitability of the deal will be influenced by various factors, including ingredient costs, labor expenses, and general overhead.
Consulting firm president Arlene Spiegel remarked that the $5 meal deal is more promotional than genuinely profitable. Furthermore, even if the deal successfully brings customers into the restaurant, franchisees may not benefit directly from the profits.
Approximately 95% of McDonald’s locations are franchised, meaning that individual franchise owners establish their own prices and manage expenses such as rent, insurance, permits, and taxes. In May, McDonald’s U.S. president Joe Erlinger noted that franchisees often employ promotional strategies like the $5 meal deal to counteract overhead costs.
Spiegel emphasized that the bundle acts as a “loss leader” meant to attract customers. When factoring in additional expenses such as labor, packaging, condiments, delivery, and marketing, franchise owners could ultimately negate any profit from the items included in the deal.