McDonald’s might generate a profit from its $5 meal deal, but it is expected to be modest. According to restaurant analyst Mark Kalinowski, the profit margin on the combo is anticipated to be between 1% and 5%, translating to approximately $0.05 to $0.25 per bundle sold.
Kalinowski pointed out that this deal is part of McDonald’s strategy to attract inflation-weary consumers back to its restaurants. The hope is that once customers enter, they will purchase additional items beyond the $5 offering.
However, achieving profitability will depend on various factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
Even if the combo succeeds in drawing customers back to the restaurant, franchisees might not see significant profits from this deal. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners decide on pricing and take on additional costs such as rent, insurance, permits, and taxes.
In May, McDonald’s U.S. president Joe Erlinger acknowledged that franchisees attempt to manage overhead costs through promotional offers like the $5 meal deal.
Spiegel noted that despite the efforts, the bundle serves more as a “loss leader” to attract and retain customers. When considering the extra costs associated with labor, packaging, condiments, delivery, and marketing, she explained that franchise owners often “wipe out any profit on any one or all of the items in the deal.”