McDonald’s is expected to see a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each bundle sold, according to restaurant analyst Mark Kalinowski.
The initiative aims to attract inflation-weary customers back to the fast-food chain, encouraging them to purchase additional items beyond the $5 offering. However, actual profitability will hinge on various factors including ingredient costs, labor, and overhead expenses.
Consulting firm president Arlene Spiegel remarked that the meal deal is primarily “more promotional than profitable.” Despite potential influx of diners, franchise owners may not benefit from the profits. Approximately 95% of McDonald’s locations are franchise-operated, meaning these owners set their own pricing and must manage their own costs such as rent, insurance, permits, and taxes.
In a previous statement, McDonald’s U.S. president Joe Erlinger acknowledged that franchisees often use promotional offers, like the $5 meal deal, to offset overhead costs. Nonetheless, Spiegel noted that the deal functions more as a “loss leader” aimed at attracting and retaining customers. After accounting for additional expenses such as labor, packaging, condiments, delivery charges, and marketing, Spiegel indicated that franchise owners could end up eliminating any profit from individual items within the bundle.