McDonalds to Launch Beverage Chain CosMc's

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Facts

  • McDonald's has announced that it will open a new spinoff chain called CosMc's, the company's first new restaurant idea in the US since its establishment. The restaurant, named after an orange alien mascot from its previous commercials, will offer iced coffee, all-day Egg McMuffins, and multiple drive-through lanes in an attempt to compete with beverage giants like Starbucks.1
  • The company said it will open its first location later this month in Bolingbrook, Illinois, near its Chicago headquarters. A sample menu, which McDonald's said is 'rooted in beverage exploration,' includes drinks such as the 'churro frappé,' 's’mores cold brew,' 'popping pear slush,' 'sour cherry energy burst,' and vitamin C shots.2
  • CEO Chris Kempczinski said the goal of the new chain, which will be able to make customized drinks difficult for McDonald's restaurants to make, is to participate in the $100B 'afternoon beverage pick-me-up occasion' market. He noted that the menu would also include 'sweet and savory treats,' such as a spicy queso sandwich, a creamy avocado tomatillo sandwich, pretzel bites, and caramel fudge brownies.3
  • McDonald's, which plans to open an additional nine McCosmic's in Texas next year, first revealed its spinoff plan in July, though photos of the Illinois location began to circulate earlier this week on X, formerly Twitter. The company is using the new chain to experiment with new restaurant layouts that are smaller and include paying with a credit card at the ordering window to speed up service times.4
  • Entering the customizable drink market will pit McDonald's against beverage giants like Dutch Bros and Starbucks, the latter of which estimated in August that cold drinks make up 75% of its US beverage sales. While some analysts have said that the smaller layout could yield higher returns by using fewer staff, others aren't sure how the company will run the chain parallel to its primary restaurant.1
  • News of the new chain comes as the company announced Tuesday plans to open an additional 9K McDonald's locations globally by 2027 — which would be 4% growth in 2024 and 5% the following years, totaling 50K restaurants worldwide by the end of the period. McDonald's said this would cost about $2.5B in capital expenditures, up from the $2.2B-$2.4B originally estimated for 2024.5

Sources: 1The Wall Street Journal, 2Forbes, 3CBS, 4CNBC and 5New York Post.

Narratives

  • Narrative A, as provided by INC. McDonald's has been at the forefront of the fast-food industry for decades, but it's also been eyeing the success of other businesses and the menus they offer. If done right, McDonald's can combine its world-class restaurant services with its number one most popular food app — and thus start swaying the younger, sweet-drink-craving generations away from the likes of Starbucks and into its customer base.
  • Narrative B, as provided by CBS. While business is certainly booming for the beverage industry — which, of course, makes other companies want a piece of the pie — a sugary drink arms race is the last thing people need in this world full of unhealthy diets. Several Starbucks drinks double a person's recommended daily added sugar intake — more than a can of Coke. The trendline people should actually follow is that as profits go up, heart health goes down.