CosMc Tropical Spice gets its purple color from a blend of lemonade, pineapple spice and dragon fruit.
in the past six months McDonald’s Hours-long drive-thru lines have dwindled since the first CosMc store opened, but the chain is just getting started.
The burger giant created the spinoff using its lesser-known McDonald’s mascot, CosMc, an alien who loves McDonald’s cheeseburgers. When McDonald’s CEO Chris Kempczinski launched CosMc’s at an investor event in December, he said the company aimed to create a brand that could sell customized drinks and coffee popular in the afternoon to appeal to younger consumers.
The launch of the new brand comes at a time when drinks are becoming increasingly popular “Now it’s viewed as part of the snacking space — a more affordable, tastier and maybe even healthier treat,” said Katie Belflower, editor at restaurant research firm Technomic. It’s a good margin for restaurants. With beverages, you can be really creative without having a product line that you have to invest in food.”
Since opening its first restaurant in the Chicago suburb of Bolingbrook, McDonald’s has opened three CosMc’s restaurants, all in Texas. The chain currently plans to open 10 stores for soft opening by the end of the year, all but one of which are in the Lone Star State.
In another sign of new brand expansion, the company will launch its own mobile app and loyalty program called CosMc’s Club on Tuesday. Customers can place their order using the app and pick it up inside the restaurant or in the drive-thru lane. Loyalty program members earn 10 points for every $1 spent; once they accumulate 400 points, they can redeem a $2 reward.
While it’s too early to tell CosMc’s long-term fate, the gamble could pay off for McDonald’s even if the spinoff never makes it past the 10-location testing phase. The app and loyalty program will provide the chain with additional consumer insights.
“For McDonald’s, the cost of doing this is a rounding error. Even if they all close six months from now, they’ll still learn something. Sometimes, what’s learned can be more valuable than you think. ,” Kalinowski, Mark’s restaurant industry analyst and CEO of Kalinowski Equity Research, told CNBC.
CosMc fever is dying down
At McDonald’s December investor presentation, Kempczinski downplayed CosMc’s short-term impact.
“Let me stress again, we are talking about 10 stores,” he said at the event. “The focus is not on CosMc itself. The focus is on what it says about McDonald’s and our potential.”
But for many consumers, CosMc is the headline news. When the first store opened in Illinois a few days later, eager customers lined up around the mall and waited for hours for a chance to buy McPops and Churro Frappes.
After a few weeks, the buzz began to die down. According to data from Intouch Insight, average waiting time Based on mystery shopper visits in January and February, it only took 11 minutes and 13 seconds from entering the drive-thru line at CosMc to arriving at the speaker to order. But the average service time after ordering was just four minutes and one second, just six seconds behind the industry benchmark.
On a Monday afternoon in May, this CNBC reporter skipped the line and arrived at one of four drive-thru intercoms to place his order.
Investor interest has cooled as McDonald’s other businesses have attracted more attention.
“Six months ago, people were curious about this, but now you’ve seen McDonald’s same-store sales decelerate, and that’s what my clients are focused on,” Kalinowski said.
McDonald’s reported first-quarter U.S. same-store sales rose 2.5%, with growth slowing as price increases subsided and diners cut back on restaurant spending.
CosMc’s experience
Digital menu boards tell customers to be patient while their orders are prepared.
Amelia Lucas/CNBC
From the outside, CosMc’s location in Bolingbrook is unassuming. Four drive-thru lines were waiting for customers to place their orders. The building’s indigo exterior bears the brand’s name, but there’s no sign of its namesake mascot.
In fact, although CosMc plays a huge role in the development of the brand fictional origin story On CosMc’s website, he is largely invisible from its brands or restaurants.
“His character is not that well-known,” Bellflower said. “I think it almost works in their favor because people can understand how CosMc’s is different from McDonald’s itself, but it still has the retro fonts and colors and things like that, so I think all of that helps tie it to nostalgia. stand up.
CosMc’s absence may also be due to the fact that when McDonald’s ran CosMc-themed ads in the 1980s and 1990s, the chain’s target customer may not have been born yet.
“Just looking at the menu, it looks like it’s designed for people half my age and younger,” said Kalinowski, who has more than two decades of experience in the industry.
CosMc patrons can choose from a wide variety of beverages and a smaller snack menu. Sour Cherry Energy Burst, Island Pick-Me-Up Punch and Popping Pear Slush are McDonald’s drinks created exclusively for the chain.
Drinks like Tropical Spice can be customized with “enhancers,” such as vitamin C shots or energy shots, tapioca pearls called boba, or a choice of eight different syrups. The chain also offers coffee drinks, such as the Churro Cold Brew Frappe, which at its maximum capacity has nearly five times the caffeine of a regular cup of brewed coffee.
CosMc’s is also the latest example of a beverage-centric restaurant that sells more than just coffee. Utah soda chain Swig is now majority-owned by Larry Miller’s family office. dutch brothers About a quarter of sales come from Blue Rebel energy drinks. and StarbucksFirst introduced more than a decade ago, cool drinks, the chain’s fastest-growing beverage category in the U.S., are launching new spicy flavors this spring.
Non-coffee beverages tend to appeal more to consumers looking for an afternoon pick-me-up. While they may still need caffeine, flavored drinks like CosMc’s Blueberry Ginger Boost may be more appealing than other coffee options.
CosMc’s level of customization would be difficult for traditional McDonald’s because it would significantly slow down its drive-thru lanes. Starbucks, for example, attributes its sales growth in recent years to a shift toward cold drinks and expensive, customized products like cold brew coffee, but customers and baristas alike have complained that complicated orders have led to slow service.
One way to speed up CosMc’s service is to use its digital menu boards in different ways. CosMc’s menu board plays ads until a car pulls up to a nearby intercom, leaving customers little time to ponder the menu of more than 70 beverages and foods. The introduction of mobile and online ordering may also help reduce wait times.
After customers complete their order, they can pay at the speaker or wait for the cashier to pay at the pickup window. CosMc also has customers wait at the intercom where they placed their order until their order is ready for pickup. The menu board will forward which pick-up window to take the order from.
CosMc’s is a small restaurant that does not offer any in-restaurant seating, and customers can choose to sit in the 10-space parking lot or continue driving. The Bolingbrook CosMc’s is a former Boston Market location and will be much larger than other McDonald’s planned locations for the brand. But considering the company’s real estate is vacant, a 45-minute drive from the company’s Chicago headquarters, and there’s a traditional McDonald’s right next door, it makes sense that the company would choose that location as the first location for the spinoff.
But the location’s history also serves as a wake-up call for McDonald’s. The company purchased the bankrupt Boston Market in 2000 with the intention of using the real estate. But it instead continued to operate the brand.
Seven years later, McDonald’s sold it and massively divested other second-tier brands like Chipotle Mexican Grill. At the time, McDonald’s sales were in trouble, and executives blamed some of the woes on a lack of focus.
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