McDonald’s is expected to achieve a modest profit from its $5 meal deal, with profit margins projected to be between 1% and 5%, translating to an estimated gain of $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this promotional offering aims to attract inflation-weary consumers back to the fast-food restaurant, with the hope that customers will purchase additional items beyond the $5 deal.
However, profit generation will rely on various elements, including the cost 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 meal deal successfully draws customers into the restaurant, it does not guarantee that franchisees will see the profits, Spiegel explained in an email. Approximately 95% of McDonald’s locations are franchise-owned, allowing individual owners to set their own prices while managing additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, stated that franchisees typically work to offset these overhead expenses by offering promotions like the $5 meal deal. Nevertheless, Spiegel emphasized that the bundle serves more as a “loss leader” intended to attract and retain customers.
Once additional costs such as labor, packaging, condiments, delivery, and marketing are considered, she indicated that owners may ultimately eliminate potential profits from the items included in the deal.