Will the CosMc’s Spinoff Take Off or Fall Flat?

McDonald’s plan for their retro spinoff CosMc’s has finally come to fruition, but so far, the execution is a mixed bag. The first location opened in Bolingbrook, Illinois last week, and the brand aims to have 10 restaurants open by the end of next year.

Initially, the restaurant’s concept was to use inspiration from CosMc, an alien craving McDonald’s food that was introduced as a McDonaldland mascot in the late 1980s.

CEO Chris Kempczinski stated that “CosMc’s is a small format concept with all the DNA of McDonald’s, but with its own unique personality.” He then told CBS News that CosMc’s concept is “what would happen if a McDonald’s character from the 1980s that was part alien, part surfer, part robot” opened its own restaurant in 2023.

Last year, McDonald’s saw success with this nostalgia-inspired strategy when the fast-food giant released a purple shake resembling its character Grimace. However, it’s not yet fully clear if that same nostalgia and thematic flavor has successfully carried over with the launch of CosMc’s.

CosMc’s menus will include customizable drinks to a certain extent and a mix of some of McDonald’s breakfast sandwiches, like the Egg McMuffin. The full menu has been revealed on the official CosMc’s website and showcases various flavors of drinks and unique sandwiches, minus the burger patties so far.

The dominant items on the menu are a plethora of coffee-inspired drinks alongside multiple flavored drinks and a new “McPops” snack.

Some additional options include:

• Spicy Queso Sandwich
• Creamy Avocado Tomatillo Sandwich
• Sausage McMuffin with Egg
• Bacon McMuffin with Egg
• Pretzel Bites
• Snack Box
• Cookie Butter McPops
• Apple Cinnamon McPops
• Hazelnut McPops
• Mixed Bag McPops
• Sea Salt Chocolate Chip Cookie
• Blueberry Lemon Cookie
• Caramel Fudge Brownie
• Various McFlurrys
• Various soft serve cones

The CosMc’s Conundrum With Consumers & Experts

Users on Reddit have already voiced their opinions on the new spinoff franchise. Early opinions remark that the spinoff should have stuck to the “McCafe” moniker, and if CosMc’s served all-day-breakfast, it would be a hit. An upvoted comment included a wish for all-day hash browns.

Other users are having difficulty trying to distinguish which customer demographic the food company was going for, and some note that the spinoff almost emulates a Dunkin’ Donuts. Furthermore, CosMc’s has been compared to a “down-market” version of Starbucks that has more eye-catching drinks with an appeal toward children. This further confused users who wondered what the purpose of having a McCafe is if CosMc’s will be competing with Starbucks. Another user claimed it reminded them of a “Playskool Starbucks” that nobody wanted.

Overall, it seems that plenty of consumers are already predicting the spinoff will fail, especially since it also appears many of the similar items are priced higher than a standard McDonald’s. There also appears to be an upset over the fact that while the fast-food company invested in this spinoff, regular McDonald’s restaurants no longer have a $1 menu and combo meals are increasing in price. The consensus is that consumers want a $1 value menu and are tired of paying upwards of $15 a meal at McDonald’s when they can spend that money at a more upscale eatery.

Meanwhile, according to William Blair, a renowned equity research firm, CosMc’s does not pose a significant threat to Starbucks, nor to the up-and-coming rival, Dutch Bros.

“This is a $100 billion category growing faster than the rest of the [informal eating-out segment] and with superior margins.”

Chris Kempczinski, McDonald’s CEO, via CNBC

CosMc’s, conceived to primarily attract the afternoon crowd with its flavored coffee and snacks, serves as a “learning lab” for McDonald’s internal team to devise ways to beat the infamous “3 p.m. slump.” This strategy bears a resemblance to Starbucks’ proven model of drawing in young customers with customizable cold coffee drinks, characteristically contributing to an increased afternoon footfall.

However, Sharon Zackfia, an analyst at William Blair, perceives the threat posed by CosMc’s to Starbucks as being “relatively muted.” Interestingly, she sees a more significant overlap between CosMc’s and Dutch Bros’ customer base, given their shared focus on colorful drinks and the exclusive drive-thru format.

Moreover, CosMc’s departs from the conventional drive-thru mode by eliminating face-to-face interactions. Customers can order and pay without engaging directly with staff, a stark contrast to the customer service-focused approach of Starbucks and Dutch Bros. This departure, coupled with a cautious rollout strategy, means that Starbucks and Dutch Bros. have little to worry about for now.

Visible through its three drive-thru windows is an array of syrups for both hot and cold beverages, a soft-serve machine churning out frappés and more, and busy mini ovens. As you pull into one of the four lanes, you’re greeted with, “Hello, and welcome to… CosMc’s.”

The restaurant has drawn in adventurous customers since its opening, with one even reportedly spending $104 on her order. Beyond the food, influencers are naturally attracted to CosMc’s unique concept, documenting their experiences and contributing to the organic buzz. All of this coverage is creating strong momentum for the new establishment.

During McDonald’s investor day, the company’s future prospects took center stage, but the immediate road ahead seems to be filled with potential hiccups. The company has been facing challenges due to a decline in spending from low-income consumers, a trend that is also affecting other retailers like Walmart. Adding to the uncertainty, McDonald’s has unveiled an ambitious blueprint for expansion. However, if history is any indication, such aggressive growth strategies have often not played out too well for the fast-food behemoth.