McDonald’s is anticipated to achieve a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%, translating to approximately $0.05 to $0.25 per meal sold, according to restaurant analyst Mark Kalinowski.
This promotional offer aims to attract consumers who are feeling the pinch of inflation, with the hope that once diners are inside, they will purchase items beyond the $5 meal. However, the overall profitability of the deal is contingent on various factors, including the costs of ingredients, labor, and other overhead expenses.
Consulting firm president Arlene Spiegel described the $5 meal deal as “more promotional than profitable.” She emphasized that while the deal may draw customers to the restaurant, franchisees may not see significant profits from it. Approximately 95% of McDonald’s locations are franchised, meaning individual owners have the freedom to set their own prices while managing additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often introduce promotional deals like the $5 meal to help offset their overhead costs. Nevertheless, Spiegel pointed out that the deal serves primarily as a “loss leader designed to attract and retain customers.” Accounting for added expenses such as labor, packaging, condiments, delivery fees, and marketing, franchise owners may find that their profits from the deal are effectively eliminated.