McDonald’s may generate some profit from its $5 meal deal, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin for the combo meal is anticipated to range from 1% to 5%, translating to approximately $0.05 to $0.25 on each bundle sold.
Kalinowski noted that this promotion is aimed at attracting inflation-weary consumers back to the restaurant, with the hope that once they are inside, they will purchase additional items beyond the $5 offer.
However, the overall profitability of this meal deal will be influenced by various factors, including ingredient costs, labor, and other overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Furthermore, even if the promotion successfully draws diners back, franchise owners may not experience increased profits. Around 95% of McDonald’s locations are franchise-owned, meaning these owners are responsible for setting their own prices and covering expenses such as rent, insurance, permits, and taxes.
In a statement from May, McDonald’s U.S. president Joe Erlinger explained that franchisees often employ promotional offers like the $5 meal deal to manage their overhead costs. Nevertheless, Spiegel indicated that the deal functions primarily as a “loss leader aimed at capturing and retaining customers.” After considering the additional expenses related to labor, packaging, condiments, delivery charges, and marketing, she suggested that franchise owners might eliminate any profit from the items included in the deal.