A slang expression for getting insane.
The "happy meal" means here "insanity", the person is on the edge of being or getting insane. The most popular use of the term, when it wasn't coined by them, was in a episode of the Sci-Fi series Stargate.
O'Neill: Lose it. It means, go crazy... nuts... insane... bonzo... no longer in possessions of one's faculties... three fries short of a Happy Meal... WACKO!!