SINCE 1988

Why McDonald’s Created CosMc’s: ‘Specialty Beverages is a Space We Have the Right to Win

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We now have more details on what has been one of the worst-kept secrets (blame social media) in fast food history – McDonald’s new CosMc’s concept. Simply put, CosMc’s is a beverage-centric concept that the company says will “solve the 3 p.m. slump.”

CosMc’s menu is robust, with five beverage categories – Signature Galactic Boosts, iced teas and lemonades, slushes and frappes, brews, and fountain and bottled drinks – as well as sandwiches, bites, baked goods, soft serve, and “From the McDonald’s Universe.” McDonald’s Universe offerings include the Egg McMuffin, Sausage McMuffin with Egg, Bacon McMuffin with Egg, and two McFlurrys. Notably, the concept doesn’t require a fryer.

Most of the beverages are customizable, with unique offerings such as turmeric spiced latte, the pomegranate hibiscus slush, sour tango lemonade, and the sour cherry energy burst. Though the menu features familiar McMuffins, it also includes a spicy queso sandwich and a creamy avocado tomatillo sandwich. And the bites include savory hash brown bites, pretzel bites, cookie butter McPops, apple cinnamon McPops, hazelnut McPops, mixed bag McPops, and a snack box.

CosMc’s debuts this week outside of Chicago, in Bolingbrook, Ill., with nine more test locations opening in Texas in the first half of 2024. The company plans to read results from those 10 locations, and “innovate, test, and learn with speed,” as CEO Chris Kempczinski explained during McDonald’s Investor Day event Wednesday.

He added that because the size of the test is so small, we shouldn’t get too excited. But that’s hard to do considering McDonald’s doesn’t just spin off new concepts willy nilly. Not to mention, the beverage space is extremely exciting right now and it should be a surprise to exactly no one that McDonald’s would want to deepen its footprint in the category. Dozens of coffee-focused startups – from Scooter’s to 7 Brew to Biggby’s and more – have entered the market and all are growing at a swift clip.

That said, the category plays predominantly in the afternoon occasion daypart, where Kempczinski says McDonald’s is under indexed.

“McDonald’s is operating from a position of strength. Customer love for the brand is stronger than any time in our history. That gives us permission to stretch the reach of the brand into new areas to grow the business. One area of focus has been identifying ways to participate in attractive and fast-growing categories. We homed in on specialty beverages and coffee… It’s a space we believe we have the right to win,” he said.

In addition to meeting rising demand, Kempczinski adds that this category generates superior margins. Perhaps the bigger story here, however, is that McDonald’s has the scale to pull pages from this fledgling playbook – not just on the menu side, but also on the operations side. The initial CosMc’s, for instance, has four drive-thru lanes to test a range of configurations and “de-stress the experience.” The idea is for customers to go at their own pace based on the size and complexity of their order. The restaurant includes visual menu boards that enable “guided exploration” and walk customers through the ordering process. Credit customers pay at the order point when employees then start making the order. Pickup windows are assigned once orders are ready.

“This de-stressed process allows a streamlined labor model where the crew is able to flex across roles and feel confident in their ability to meet customers’ needs throughout the process,” the company said, adding that the app is “easy, mood boosting and encourages exploration.”

From ideation to execution

The idea of CosMc’s – based on the chain’s alien character from the 1980s – manifested just over a year ago and came to life because it checked three key boxes for the company:

  • Differentiated. “We needed to be confident the concept could bring a product or experience that’s unique and compelling,” Kempczinski said.
  • Global appeal. “It’s not worth our time to develop an idea that will only work in one market. We need big ideas that have global appeal and can work across multiple markets,” Kempczinski said.
  • Economics. “The potential to offer strong returns and be highly incremental are critical to adoption and execution of any future expansion of the concept,” Kempczinski said.

“The big story isn’t about CosMc’s per se. The big story is what it says about McDonald’s and its potential,” he said. “We’ll continue to explore other ideas that can take advantage of our unique combination of assets, opening new growth opportunities and extending our brand into new areas. Imagine the possibilities if McDonald’s then connected these great innovations to one of the largest consumer platforms in the restaurant industry.”

 

Original Article:
[H/T] RestaurantBusinessOnline.com