McDonald’s is expected to earn a slim profit from its $5 meal deal, with estimates suggesting a profit margin ranging from 1% to 5%. This translates to about $0.05 to $0.25 for each meal sold, according to restaurant analyst Mark Kalinowski. The initiative aims to attract consumers who are feeling the pinch of inflation, hoping that once they are in the restaurant, they will spend more than just the $5 meal.
Profitability will be influenced by various factors, such as ingredient costs, labor, and overhead expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the $5 meal deal is “more promotional than profitable.”
While the deal may help drive customers back to McDonald’s, it does not guarantee that franchise owners will benefit financially. Approximately 95% of McDonald’s locations are franchisee-owned, and these owners set their own prices while dealing with various costs, including rent and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., noted that franchisees use promotional offers like the $5 meal to offset overhead. However, Spiegel argues that the deal functions more as a “loss leader,” intended to attract customers. She highlighted that when considering additional costs such as labor, packaging, and marketing, franchise owners often end up with little to no profit from the meal deal.