McDonald’s is embarking on a new venture with the launch of a coffee-focused restaurant spinoff called “CosMc’s”. The first location opened this week in Bolingbrook, Illinois as a test concept before potential wider rollout.
New retail brand takes aim at Starbucks and Dunkin’
CosMc’s features a radically different menu compared to traditional McDonald’s, with a focus on specialty coffees, teas, smoothies and frappes. McDonald’s executives have directly cited competing with Starbucks and Dunkin’ as a goal.
The new restaurants have futuristic alien-themed decor and are designed to become a hip destination. The mascot alien character CosMc also features prominently.
Early photos show seating reminiscent of Starbucks stores, and menu boards touting items like “churro cold brew frapps” and “guava lemon elderflower sidecars”. Prices appear competitive to Starbucks.
CosMc’s Menu Prices
| Item | Price |
|---|---|
| Churro Cold Brew Frapp | $5.89 |
| Guava Lemon Elderflower Sidecar | $4.99 |
| Cosmic Coconut Refreshers | $4.29 -$4.89 |
The beverage focus means food takes a backseat at CosMc’s. Food offerings appear limited to a small selection of pastries, with an “avocado tomatillo” sandwich the only real meal option revealed so far.
New retail concept key to McDonald’s growth
The launch of CosMc’s represents McDonald’s ambition to tap into new revenue streams and better compete in the high-growth coffee sector currently dominated by Starbucks.
McDonald’s CEO Chris Kempczinski calls specialty coffee a $40 billion market where McDonald’s currently has just 2% share:
“This is a big and growing category. It’s a marketplace where we have the right to win.”
Industry analysts have applauded the move as a smart brand extension for McDonald’s. Marketing large branded chains is increasingly difficult, so focusing CosMc’s on a very specific product niche makes sense strategically.
CosMc’s also allows McDonald’s to experiment with new retail concepts without diluting its core brand’s identity.
Locations confirmed so far
The first CosMc’s location is at 500 E Boughton Rd, Bolingbrook, IL. Additional sites are planned for Texas and Southern California in 2023 for further testing.
If successful McDonald’s intends to take the concept nationwide, with up to hundreds of potential locations.
Confirmed Upcoming CosMc’s Locations
- North Texas – Early 2024
- Southern California – Early 2024
McDonald’s has not revealed specifics for other sites yet, simply stating more openings across the US will follow in 2024 if the concept succeeds.
Analysts theorize standalone units could work in higher-traffic areas near college campuses, offices and urban centers. Alternatively converting sections of some existing McDonald’s into small CosMc’s outlets may be an option.
What will success look like?
McDonald’s has not set specific targets for CosMc’s at this very early stage. However industry experts suggest each unit generating up to $2 million in annual sales would likely be viewed as successful.
For comparison an average US Starbucks makes around $1.6 million annually. Outperforming Starbucks benchmarks is seen as a realistic goal long-term if CosMc’s achieves scale.
In the short term McDonald’s will be studying customer reactions and fine tuning the concept. Positive feedback and buzz on social media will be viewed favorably.
Could more spinoff brands follow?
The creation of CosMc’s as an entirely separate brand has sparked speculation that additional spinoff restaurant chains could follow.
While McDonald’s has not commented on future plans, analysts point to its McCafe bakery cafes in Australia as representing another product niche with potential.
There is also scope for more localised chains tailored to specific markets, following the lead of Asian operators who have launched chains like “McCafe by Barista” and “McDelivery”.
For now McDonald’s is tightly focused on ensuring CosMc’s proves viable. But further segmented brand extensions look likely in future based on its performance.
What does it mean for the wider industry?
The opening of CosMc’s makes McDonald’s the latest restaurant giant to bet big on specialty coffee to drive growth.
Competitors like Restaurant Brands’ Burger King have also talked up expanding coffee programs recently. Other chains may reevaluate their own coffee strategies after seeing customer reactions to CosMc’s.
There is also the question of whether McDonald’s could look to acquire an established coffee brand outright if CosMc’s shows early promise.
Names like Dutch Bros and Caribou Coffee are seen as potential targets that would give it an instant footprint in the coffee space.
In the background Starbucks will be keeping a close eye on the performance of CosMc’s and how much share McDonald’s can realistically capture.
While still the dominant player, analysts suggest McDonald’s entry into specialty coffee still represents Starbucks’ biggest competitive threat yet. Its response as CosMc’s expands will be telling.
That wraps up the key details on McDonald’s new retail coffee concept CosMc’s. Check back for further updates as more locations open and customer feedback comes in during 2023.
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