McDonald’s $5 meal deal could yield a profit, albeit a modest one.
Restaurant analyst Mark Kalinowski suggests that the fast food chain might see a profit margin between 1% and 5% on this combo, translating to approximately $0.05 to $0.25 for each bundle sold.
Kalinowski noted that this deal aims to attract inflation-weary consumers back into McDonald’s outlets, with the hope that they will buy more than just the $5 meal.
However, achieving profitability will depend on several factors, including ingredient costs, labor, and overhead expenses.
Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” Spiegel mentioned that even if the deal draws customers back, franchisees may not see immediate profits.
Approximately 95% of McDonald’s locations are franchisee-owned, meaning individual owners must handle costs like rent, insurance, permits, and taxes, which can impact overall profitability.
In May, McDonald’s U.S. president Joe Erlinger noted that franchisees often use promotional deals like the $5 meal to offset overhead costs.
However, Spiegel pointed out that the bundle acts as a “loss leader to capture and re-capture guests.” When considering additional expenses such as labor, packaging, condiments, delivery charges, and marketing, owners often “wipe out any profit on any one or all of the items in the deal.”