McDonald’s may generate a slight profit from its $5 meal deal, but it’s expected to be minimal. According to restaurant analyst Mark Kalinowski, the profit margin on the combo is estimated to be between 1% and 5%, translating to roughly $0.05 to $0.25 for each meal sold.
Kalinowski noted that this deal is designed to attract budget-conscious customers amid inflation, encouraging them to purchase additional items once inside the restaurant. However, profitability will be influenced by variables such as ingredient costs, labor expenses, and overhead.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She explained that while it may bring diners back, franchisees may not directly benefit from this promotion due to the nature of their operations.
Approximately 95% of McDonald’s locations are franchise-owned, meaning these owners set their own prices and must contend with various expenses, including rent, insurance, and taxes. In May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often use promotions like the $5 meal deal to help offset their overhead.
Spiegel emphasized that many factors, including labor, packaging, condiments, delivery costs, and marketing expenses, can significantly diminish any potential profit from the deal, leading owners to essentially eliminate profit margins on these items.