McDonald’s is expected to turn a modest profit from its $5 meal deal, with margins projected between 1% and 5%, translating to around $0.05 to $0.25 per package sold, according to restaurant analyst Mark Kalinowski. This initiative aims to attract inflation-sensitive consumers back to the restaurant, with the hope that they will purchase more than just the discounted meal.
However, the profitability of this meal deal will be influenced by various factors, including the costs of ingredients, labor, and other overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.”
Moreover, many franchise owners may not see these profits directly. Approximately 95% of McDonald’s locations are franchise-owned, meaning that individual owners set their prices and manage extra expenses such as rent, insurance, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., noted that franchisees often implement promotional deals like the $5 meal deal to help mitigate their overhead costs. Nonetheless, Spiegel indicated that the bundle functions primarily as a “loss leader” designed to attract and retain customers. After accounting for labor, packaging, condiments, delivery fees, and marketing costs, franchise owners may find that their potential profits are effectively reduced or eliminated.