McDonald’s is expected to achieve a modest profit from its $5 meal deal, with margins anticipated to be between 1% and 5%. According to restaurant analyst Mark Kalinowski, this translates to a profit of approximately $0.05 to $0.25 per combo sold. The fast-food giant views this deal as a strategy to attract budget-conscious consumers and encourage them to purchase additional items once they are in the restaurant.
However, the actual profitability of the meal deal hinges on various factors including the rising costs of ingredients, labor, and other operational expenses. Arlene Spiegel, president of Arlene Spiegel & Associates, remarked that the $5 offering is primarily promotional rather than a reliable source of profit.
Kalinowski noted that although the meal deal can draw customers in, franchise owners may not see these profits directly. With around 95% of McDonald’s locations being franchisee-operated, individual owners determine their own pricing strategies while also managing costs like rent, insurance, permits, and taxes.
In May, Joe Erlinger, president of McDonald’s U.S., indicated that franchisees often implement promotional deals to help offset their overhead costs. Nevertheless, Spiegel emphasized that the $5 meal deal functions more as a “loss leader” aimed at attracting customers rather than generating substantial profit. She highlighted that when accounting for expenses such as labor, packaging, condiments, delivery, and advertising, franchise owners may ultimately negate any potential earnings from the meal deal.