Hey, McDonald's, Just WHAT Is CosMc's?


Last week McDonald’s announced the long-awaited launch of CosMc's, “a new beverage concept from the McDonald’s Universe.” It was hinted at on a previous investor call, and the QSR industry has been abuzz ever since. Where is it? What is it? How many are there of it?

The industry now has most of its answers:

It has a drink-centric menu, serving specialty beverages NOT found in your local McDonald’s, including such items as a Churro Frappe, Sour Cherry Energy Burst, Blueberry Ginger Boost, and a Turmeric Spiced Latte. The menu also includes food offerings only available at CosMc’s, including a Creamy Avocado Tomatillo Sandwich, Pretzel Bites and Blueberry Lemon Cookies, alongside a select few McDonald’s’ classics such as the Egg McMuffin and McFlurry.

It's in one location, near the chain’s Chicago headquarters in Bolingbrook, Illinois, with nine more locations slated for Texas before the end of 2024.

Since the initial launch late last week, the company website has been updated with cartoon images of the mysterious 1980’s McDonald’s alien character CosMc, for which the new concept was named.

QSR Insider spoke to Morningstar Equity Analyst Sean Dunlop about how CosMc's fits in with the McDonald’s brand, and what the new chain means for customers. 

QSR Insider: You’ve stated in previous commentary the “4Ds” that McDonald’s is leaning on, which are digital, drive-thru, delivery and development. How does CosMc's fall under these?

Sean Dunlop: It’s a big question, as it kind of branches across a few of those. It’s got elements of the best of what we see in competing QSR brands, with the emphasis on hand-crafted cold beverages, something that is very much co-opted from Starbucks.

You also see some of these the pseudo drive-through lanes that look a lot like we expect from Sonic. So in terms of experimenting with these touch points, these modalities, obviously CosMc's has to be successful to try to scale it, but even if it's not, they might take the digital learnings and apply those to new McDonald’s.

QSR Insider: Why would McDonald’s develop an entirely new brand identity for CosMc's? Why use the CosMc character?

Dunlop: In order to 1) get the brand (perceived) as a younger and more innovative brand and 2) to convey they're experimenting and tinkering with the leading edge of the technology changes taking over the restaurant industry as of late.

I think sincerely that the branding is not really that closely related to McDonald’s. Obviously CosMc's has a different color scheme. Yes, there are some items from the McDonald's menu, but there’s only [slight] branding that would indicate that the two restaurants are connected.

[In terms of the character], I think they’re using CosMc in the same way they used [the limited-edition Cactus Plant Flea Market] promo last year. It’s sort of a more holistic big buzz and marketing creative platform, and it’s been working, as it’s obviously attracted a lot of media attention already, and it’s only 10 stores.

QSR Insider: Is CosMc's really here just to compete with Starbucks?

Dunlop: That's a good question -- but probably not. I would say their niche is that sort of three p.m. day part so that's typically when high school students are getting out of class. It's really pretty quiet in the restaurant industry then, and you get concepts that build around lunch, you have restaurants who have concepts developed around dinner, you've got McDonald’s that says about 30% of the sales in the U.S. are in the breakfast daypart, and the McCafé units in some international markets that do compete on the basis of coffee and bakery.

But this feels a little bit different in that, yes, they are testing out new beverages that can compete a little bit more directly with Starbucks, so if they get it right, then they can compete in the more traditional McDonald stores.

QSR Insider: Do you think the day will come when we see a CosMc's on every corner?

Dunlop: No. You know you could -- but that that's the tricky thing, you're still competing for the same sites and still have to build up the supply chain. You have Starbucks but you also have Dutch Bros. and Caribou and Dunkin’.

Historically, what we’ve seen is everyone that is trying to compete directly with Starbucks in the chain coffee category winds up moving down market. With Coffee Bean being recently commoditized, you're competing on the basis of either price or the other attached items. Starbucks has continued to struggle to roll out really viable breakfast platform, so the (places) that usually compete, compete food-first.

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