McDonald’s is looking to make a modest profit from its $5 meal deal, with profit margins expected to fall between 1% and 5%. This translates to a profit of approximately $0.05 to $0.25 for each combo sold, according to restaurant analyst Mark Kalinowski.
The fast-food giant aims to attract consumers who are wary of inflation, hoping that the deal will entice them to make additional purchases during their visit. However, achieving a profit relies on various factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” She noted that while the combo may draw customers back to the restaurant, franchise owners might not necessarily benefit from the sales. Approximately 95% of McDonald’s locations are franchise-owned, meaning individual owners set their prices and are responsible for additional costs such as rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., mentioned that franchisees often implement promotional offers like the $5 meal deal to manage overhead costs. However, Spiegel emphasized that such deals often serve as “loss leaders” to attract and retain customers. Once various expenses such as labor, packaging, condiments, delivery fees, and marketing are considered, franchise owners often find that these deals erase any potential profits from the included items.