McDonald’s is expected to generate a modest profit from its $5 meal deal, with profit margins estimated between 1% and 5%. According to restaurant analyst Mark Kalinowski, this translates to a profit of approximately $0.05 to $0.25 for each meal sold. The fast-food giant sees this promotion as a strategy to attract consumers who are feeling the pinch of inflation, hoping that once customers are inside, they will consider additional purchases beyond the $5 offer.
However, profitability is contingent upon various factors, including the costs of ingredients, labor, and other overhead expenses. Arlene Spiegel, president of the consulting firm Arlene Spiegel & Associates, described the deal as “more promotional than profitable.” She noted that while the combo may draw diners back to the restaurant, franchise owners may not see significant profits due to the costs they incur, including rent, insurance, permits, and taxes.
Approximately 95% of McDonald’s locations are franchise-owned, allowing owners to set their own prices while managing added expenses. In a previous statement, McDonald’s U.S. president Joe Erlinger mentioned that franchisees often implement promotional deals like the $5 meal to alleviate overhead costs. Despite this strategy, Spiegel referred to the offer as a “loss leader” designed primarily to attract and retain customers. Once expenses related to labor, packaging, condiments, delivery, and marketing are taken into account, franchise owners may find that any potential profits from the deal are effectively eliminated.