McDonald’s could see a modest profit from its $5 meal deal, with an anticipated profit margin between 1% and 5%, translating to about $0.05 to $0.25 per bundle sold, according to restaurant analyst Mark Kalinowski.
Kalinowski noted that the deal aims to attract inflation-weary consumers back to McDonald’s, encouraging them to purchase more than just the $5 offering.
However, profitability will depend on various factors such as 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.” She emphasized that while the deal might draw diners back, franchisees might not necessarily see those profits.
Approximately 95% of McDonald’s restaurants are franchise-owned, meaning individual owners set their own prices and bear additional costs like rent, insurance, permits, and taxes.
McDonald’s U.S. president Joe Erlinger mentioned in May that franchisees mitigate overhead costs with promotional offers, including the $5 meal deal.
Despite this, Spiegel stated that the bundle serves more as a “loss leader to capture and re-capture guests.” She explained that once labor, packaging, condiments, delivery charges, and marketing expenses are considered, owners “basically wipe out any profit on any one or all of the items in the deal.”