McDonald’s is anticipated to make a profit from its $5 meal deal, although it will likely be modest. According to restaurant analyst Mark Kalinowski, the fast-food chain may achieve a profit margin ranging from 1% to 5%, translating to approximately $0.05 to $0.25 for each meal bundle sold.
Kalinowski highlighted that this meal deal aims to attract inflation-weary consumers, encouraging them to enter the restaurant and potentially purchase additional items beyond the $5 offer.
However, achieving profitability relies on various factors, including the costs of ingredients, labor, and overhead expenses. Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.”
She cautioned that even if the deal brings diners back, franchisees may not share in those profits. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners determine their prices and must manage additional expenses like rent, insurance, permits, and taxes.
In a May statement, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often employ promotional offers, such as the $5 meal deal, to offset these overhead costs. Nonetheless, Spiegel noted that the bundle serves more as a “loss leader” to attract and retain customers. When considering additional expenses like labor, packaging, condiments, delivery charges, and marketing, many franchise owners may find that any profits from this deal are effectively diminished.