McDonald’s is expected to achieve only 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 meal sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that this deal is part of McDonald’s strategy to attract inflation-weary customers back into stores and encourage them to purchase additional items beyond the $5 meal. However, profitability will be influenced by various factors such as ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, commented that the $5 meal deal is “more promotional than profitable.” She emphasized that even if the deal successfully brings customers into the restaurant, it may not necessarily translate to profits for franchise owners.
With approximately 95% of McDonald’s locations being franchisee-owned, individual owners set their own prices and manage costs related to rent, insurance, permits, and taxes. In May, McDonald’s U.S. president Joe Erlinger mentioned that franchisees use promotional offers, like the $5 deal, to help manage overhead expenses.
Despite this approach, Spiegel described the bundle as a “loss leader” aimed at attracting and retaining customers. Once expenses for labor, packaging, condiments, delivery, and marketing are accounted for, franchise owners can end up with little to no profit from the deal.