McDonald’s may see a modest profit from its new $5 meal deal, with projected profit margins estimated between 1% and 5%. This translates to earnings of approximately $0.05 to $0.25 for each bundle sold, as noted by restaurant analyst Mark Kalinowski.
Kalinowski indicated that the promotion aims to draw inflation-weary consumers back to the restaurant, with the hope they will make additional purchases beyond the $5 offer. However, actual profitability will depend on various factors, including ingredient prices, labor costs, and overall overhead expenses.
Arlene Spiegel, president of Arlene Spiegel & Associates, described the $5 meal deal as “more promotional than profitable.” Even if it successfully attracts customers, it does not guarantee profits for franchise owners. Approximately 95% of McDonald’s locations are franchise-owned, meaning these owners set their own prices and manage additional costs like rent, insurance, permits, and taxes.
In May, Joe Erlinger, McDonald’s U.S. president, mentioned that franchisees often implement promotional deals like the $5 meal to offset overhead expenses. Nevertheless, Spiegel stated that the bundle acts more like a “loss leader” aimed at attracting and retaining customers. When additional costs such as labor, packaging, condiments, delivery fees, and marketing are considered, franchise owners may end up eliminating any potential profit from the items included in the deal.