This Summer, the unexpected happened.
McDonald's revealed plans for a new restaurant concept, dubbed CosMc's. Little was known about the name, as it was derived from a lesser-known McDonald's character, an Alien named CosMc. In a July analysts' conference, Chris Kempczinski, the CEO of CosMc, shared that CosMc's had the "entire DNA of McDonald's but a unique personality."
During an investors' event, Kempczinski revealed more about the company's plans for larger burgers and numerous restaurants, and then proceeded to cosmetically introduce CosMc's. He rhetorically asked, "What if a McDonald's character from the 80s was part-extraterrestrial, part-surfer, part-robot, and decided to open a restaurant in 2023? What would happen?"
The answer: A hybrid alien-surfer robot would open a Starbucks competitor, offering tastier beverages and naming the establishment after himself.
Churro-Smoothies and S'mores Cold-Brew Coffee
Kempczinski revealed that McDonald's aimed to enter the specialty coffee market, a "lucrative and rapidly growing sector." However, inserting a new line of drinks to the regular menu would complicate kitchen operations and slow service.
As a result, the new concept is being tested to determine whether people would stop by CosMc's during their lunch breaks to savor Churro-Smoothies, S'mores Cold Brew, Chai-Smoothies, or customizable beverages. They might even pair it with cookies, ice cream, or one of several sandwiches.
Following Starbucks's Strategy, With a Twist
McDonald's appears to be following Starbucks's CosMc strategy, focusing on cold, sweet beverages with customizable flavors. Cold beverages account for the majority of Starbucks's revenue. In November, Starbucks confirmed that pricier Latte Macchiatos and custom-made beverages had contributed to a rise in the U.S. quarterly income for the coffee chain, which concluded on October 1.
Kempczinski warned investors against getting too excited: CosMc is still just a test. In fact, a standalone location in Bolingbrook, Illinois, would open this week, followed by nine additional locations in Texas by the first half of next year.
Expanding McCafé Beyond Small-Scale Tests
But McDonald's does not view coffee's potential solely in limited tests. Instead, it's shifting its emphasis on McCafé across its regular restaurants. Jo Sempels, responsible for McCafé's market licenses, stated, "Coffee is an extremely attractive category. It's large, it's profitable, it's growing fast, and it has a very strong habituation."
However, McDonald's is not yet fully tapping into its global potential with McCafé. To strengthen the coffee business, McCafe will become a core part of the menu and the sole McCafé brand at McDonald's, while simplifying the required equipment to ensure consistent taste at all locations.
Furthermore, McDonald's is working on a program for iced coffee, potentially adopting Starbucks's cold beverage enthusiasm.
