McDonald's has unveiled details about its long-anticipated CosMc's concept, previously shrouded in secrecy. The café pilot appears to be McDonald's response to Starbucks.
It turned out to be weirder than expected.
Earlier, it was revealed that CosMc's is named after a lesser-known McDonald's character, an alien. Additionally, CEO Chris Kempczinski described the concept as a "small format concept with all the DNA of McDonald's but its own unique personality" during an analyst call in July.
During an investor event on Wednesday, Kempczinski provided further details. Following a comprehensive discussion of the company's plans for larger burgers and additional restaurants, Kempczinski delved into CosMc's with an introduction reminiscent of Steve Jobs.
Advertisement
“There is one more thing,” he told attendees. “CosMc’s.”
“What would happen if a McDonald’s character from the 1980s that was part alien, part surfer, part robot — what would happen if this character were to open a restaurant in 2023?” Kempczinski asked.
The answer: The alien robot surfer would establish a Starbucks competitor featuring even more extravagant drinks, naming it after itself.
Sipping Into The Speciality Coffee Business
McDonald's aims to venture into the specialty coffee business, a sector deemed "attractive and fast-growing," according to Kempczinski. However, he emphasized that McDonald's cannot simply introduce numerous new drinks to its regular menus as it would complicate kitchen operations and impede service speed.
Advertisement
Therefore, the company is experimenting with this fresh concept to determine if customers will swing by CosMc's for a mid-afternoon pick-me-up, purchasing options like a churro frappe, s'mores cold brew, chai frappe burst, or other customizable beverages. Perhaps they might even combine these drinks with cookies, ice cream, or select sandwich choices.
CosMc's appears to have McDonald's taking a page from Starbucks' playbook, emphasizing cold, sweet beverages that offer customization options. Cold drinks constitute a significant portion of Starbucks' sales. In November, Starbucks attributed the uplift in its U.S. sales for the quarter ending on October 1 to high-priced lattes and personalized drink choices.
Kempczinski warned investors against excessive enthusiasm, emphasizing that CosMc's is still in the testing phase. Currently, one location is set to open in Bollinbrook, Illinois, later this week. Over the first half of the upcoming year, McDonald's intends to open an additional nine locations, all situated in Texas.
Rebooting McCafe
McDonald's recognizes an opportunity for coffee not only within the limited test of CosMc's but also at its regular establishments.
“Coffee is a very attractive category,” stated Jo Sempels, responsible for overseeing markets where McDonald's has licensed its brand, earlier in the day. “It is large, highly profitable, growing quickly, and obviously with strong habitual behavior.”
Advertisement
Regarding McCafe, Sempels remarked, “we still haven’t realized our full global potential.”
To enhance the company's coffee business, “we will establish McCafe as part of our core menu offering and as our only brand for coffee at McDonald’s,” he stated, further noting that the company will standardize the equipment to ensure consistent coffee taste across all locations.
Additionally, he mentioned that the company is developing a strategy for cold coffee. Here, too, McDonald's could be drawing insights from Starbucks' triumph with their range of cold beverages.
