McDonald’s is expecting to see a modest profit from its $5 meal deal, with margins projected to be between 1% and 5%. This translates to approximately $0.05 to $0.25 for each combo sold, based on insights from restaurant analyst Mark Kalinowski.
Kalinowski stated that the promotion aims to attract customers struggling with inflation back to the restaurant, hoping that once inside, they will purchase additional items beyond the $5 deal.
However, profitability will depend on various factors, including ingredient costs, labor, and overall overhead expenses. Arlene Spiegel, president of consulting firm Arlene Spiegel & Associates, remarked that the $5 meal deal is designed to be “more promotional than profitable.”
Though the offer may encourage diners to return to the restaurant, it does not guarantee that franchisees will see any of those profits. Approximately 95% of McDonald’s locations are franchised, meaning that individual owners set their own prices and manage expenses like rent, insurance, permits, and taxes.
In May, Joe Erlinger, the U.S. president of McDonald’s, indicated that franchisees often employ promotional strategies, including the $5 deal, to help offset these overhead costs. However, Spiegel noted that the combo serves primarily as a “loss leader to capture and re-capture guests.” She pointed out that when accounting for labor, packaging, condiments, delivery fees, and marketing costs, franchise owners may effectively eliminate any profit from the deal entirely.