Six months after opening its first CosMc’s location, McDonald’s drive-thru lines have settled, but the venture is just beginning.
The fast-food giant launched CosMc’s, inspired by a lesser-known McDonaldland mascot, CosMc, an alien fond of McDonald’s cheeseburgers. At a December investor event, McDonald’s CEO Chris Kempczinski introduced the brand, aimed at selling customizable drinks and coffee to attract younger consumers in the afternoon segment.
Katie Belflower, an editor at Technomic, notes that beverages are now seen as a profitable, creative part of the snack sector.
“They offer good profit margins and don’t require the extensive product lines of food,” she said.
Since opening the first location in Bolingbrook, Illinois, McDonald’s has added three more in Texas. The plan is to open ten locations by the end of the year, primarily in Texas, for a test run.
CosMc’s is also launching its own mobile app and loyalty program, CosMc’s Club, on Tuesday. Customers can use the app to place orders for pickup inside the restaurant or at the drive-thru. Loyalty members earn 10 points per dollar spent, redeemable for rewards.
Even if CosMc’s doesn’t expand beyond the test phase, the initiative could still benefit McDonald’s by providing valuable consumer insights. “The cost is negligible for McDonald’s,” said Mark Kalinowski, CEO of Kalinowski Equity Research. “Even if it fails, the learnings could be invaluable.”
At the December investor presentation, Kempczinski emphasized the small scale of CosMc’s. “We’re talking about 10 stores,” he said. “The big story is about McDonald’s potential, not just CosMc’s.”
Despite this, CosMc’s drew significant consumer interest. When the first location opened in Illinois, customers waited for hours to try McPops and Churro Frappes.
However, the excitement has since waned. Intouch Insight found that in January and February, the average wait time from entering the drive-thru line to ordering was over 11 minutes, though service time after ordering was just over four minutes, close to the industry benchmark.
On a Monday afternoon in May, there was no line for a CNBC reporter to place an order at one of the drive-thru intercoms.
Investor interest has also shifted to other parts of McDonald’s business. “Six months ago, there was a lot of curiosity about CosMc’s. Now, clients are focused on McDonald’s same-store sales,” said Kalinowski.
McDonald’s reported a 2.5% growth in U.S. same-store sales in the first quarter, a slowdown as price increases taper off and consumers reduce restaurant spending.
The Bolingbrook CosMc’s location features four drive-thru lines and an indigo exterior with the brand’s name but no mascot. CosMc, while central to the brand’s origin story on its website, is absent from its physical branding.
“He’s not a well-known character,” said Belflower. “This can be beneficial, as it differentiates CosMc’s from McDonald’s, while still using retro fonts and colors to tie into nostalgia.”
CosMc’s absence may also be due to the target demographic, who likely weren’t born when CosMc appeared in McDonald’s ads in the ‘80s and ‘90s.
“The menu seems aimed at a younger audience,” said Kalinowski, who has over two decades of industry experience.
Years ago, McDonald’s divested from secondary brands like Chipotle Mexican Grill to refocus on its core business. This followed a period of struggling sales and a strategy to streamline operations.