McDonald’s $5 meal deal may yield only a modest profit for the fast-food giant, according to restaurant analyst Mark Kalinowski. The profit margin for this combo is expected to range between 1% and 5%, equating to approximately $0.05 to $0.25 for each meal sold.
Kalinowski noted that the promotion aims to attract inflation-weary customers back to McDonald’s, with hopes they will make additional purchases beyond the $5 meal deal. However, actual profitability will depend on various factors, including ingredient costs, labor expenses, and overheads.
Arlene Spiegel, president of Arlene Spiegel & Associates, emphasized that the deal is “more promotional than profitable,” indicating that while it may bring customers into the restaurant, franchisees might not necessarily benefit from the sales. About 95% of McDonald’s locations are franchise-owned, meaning each owner sets their own prices and must manage costs, including rent, insurance, permits, and taxes.
In May, McDonald’s U.S. president Joe Erlinger indicated that franchisees often use promotional offers like the $5 deal to help offset their overhead costs. Nonetheless, Spiegel described this meal deal as primarily a “loss leader” intended to attract and retain customers. After accounting for the costs of labor, packaging, condiments, delivery, and marketing, she stated that franchise owners could effectively eliminate any potential profit from the deal.