Shedding light on its long-awaited and oddly secretive CosMc’s concept, McDonald’s on Wednesday finally shared more about the café pilot, which seems to be its answer to Starbucks.
It was weirder than expected.
Over the summer, McDonald’s teased the test of a new restaurant concept.
We knew then that CosMc’s is named for a little-known McDonald’s character, an alien. We also learned that CosMc’s “is a small format concept with all the DNA of McDonald’s but its own unique personality,” in the words of CEO Chris Kempczinski, who discussed the concept during an analyst call in July.
On Wednesday, Kempczinski finally revealed more during an investor event. Late in the day, after a detailed discussion of the company’s plans for bigger burgers and more restaurants, Kempczinski got to CosMc’s, with a Steve Jobsian intro.
“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 robot-surfer-alien would open a Starbucks rival with even more indulgent drinks, and name it after himself.
Churro frappes and s’mores cold brew
McDonald’s wants to get into the specialty coffee business, an “attractive and fast growing category,” Kempczinski said. But, he added, McDonald’s can’t just add a bunch of new drinks to its regular menus – it would complicate kitchen operations and slow service down.
So it’s testing out this new concept to see if people will swing by CosMc’s during their afternoon slumps to buy a churro frappe, s’mores cold brew, chai frappe burst, or another customizable beverage. Maybe they’ll even pair it with cookies, ice cream, or one of a few sandwiches.
With CosMc’s, McDonald’s seems to be looking at Starbucks’ playbook — a focus on cold, sweet beverages that can be modified to taste. Cold drinks make up the majority of Starbucks’ sales. In November, Starbucks said that high-priced lattes and customized drinks helped lift the coffee chain’s US sales in the quarter ending on October 1.
Kempczinski warned investors not to get too excited: CosMc’s is still just a test. So far, there’s one location opening in Bollinbrook, Illinois, later this week. Through the first half of next year, McDonald’s plans to open nine more locations all in Texas.
McDonald’s sees an opportunity for coffee not just in the limited test, but at its regular locations, as well.
“Coffee is a very attractive category,” said Jo Sempels, who oversees markets where McDonald’s has licensed its brand, earlier on Wednesday. “It is large, highly profitable, growing quickly, and obviously with strong habitual behavior.”
When it comes to McCafe, “we still haven’t realized our full global potential,” Sempels said.
To strengthen 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 said, adding that the company will also streamline the equipment it uses to make sure coffee tastes consistent across locations.
Plus, he said, the company is working on a cold coffee plan. Here, too, McDonald’s may be learning from Starbucks’ cold drink bonanza.
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