McDonald’s new spin-off concept CosMc’s is ready to capture the specialty beverage and coffee retail market.
The fast-food giant opened its first customizable drinks and coffee retail outlet near Chicago, IL, its first new store concept in 60 years. Named after an obscure McDonald’s character from the 1980s, CosMc’s is meant to capitalize on nostalgia and capture the “3 pm slump” market.
Inspired by successful beverage retailers like Starbucks and Dunkin Donuts, CosMc’s offers a large menu of hot and cold customizable coffees, teas, sodas, and a few easy-to-eat snacks.
CEO Chris Kempczinski told McDonald’s investors that the $100 billion specialty beverage and coffee retail category “Is growing faster than the rest of the [informal eating-out segment] and with superior margins… It’s a space we believe we have the right to win.”
Just around the corner from McDonald’s headquarters in Chicago, Illinois, the trial outlet will soon be joined by nine more retail locations in Dallas-Fort Worth and San Antonio, Texas.
The concept is drive-thru only, prioritizing streamlining the ordering process. Employee interaction will be minimized as customers paying cashless can do so directly at the order screen. Multiple pick-up windows allow those ordering food or beverages to quickly grab their items and go. Catering to the growing trend of food delivery apps, CosMc’s will be take-out-only, eliminating the need for a larger dining room space.
The beverage menu offers personalized drinks with an emphasis on cold beverages, which lead the market in sales. To appeal to younger customers, there will be items such as Tumeric Spiced Lattes and S’mores Cold Brew coffee, along with add-ons like boba pearls and vitamin C shots.
For CosMc’s snacks menu, McDonald’s will offer some of their best-selling international items like McPops (donuts stuffed with sweet fillings) and Pretzel Bites. While there will be sandwiches like Egg McMuffins and Spicy Queso, there will be no hamburgers or combo meals. They are clarifying that this beverage-led concept will be less expensive and easier to operate.
This year marks a rapid increase in expansion for McDonald’s. The company has said it will invest over $1 billion in opening 1,900 new stores worldwide. Four hundred locations are slated for the US, UK, Canada, and Europe.
However, the company has said it will spend a year testing the new concept. Ten stores don't seem like that much in the grand scheme of things. There are more than 40,000 coffee shops in the US.
“Let me emphasize again, we’re talking about ten stores,” Kempczinski told investors. “The big story isn’t about CosMc’s, per se. The big story is what it says about McDonald’s and our potential. To think, this was an idea a little over a year ago, and this week, we’re opening the first test site.”
By capturing people’s nostalgia for the McDonald’s of their childhood, the company has managed to increase sales this year through a successful Grimace social media campaign. With CosMc’s out-of-this-world menu and retro character revival, they hope to repeat that success.