Dive Brief:
- CosMc’s, McDonald’s beverage-focused spinoff brand, will close its remaining units starting in late June, the Golden Arches announced Friday. CosMc’s opened its first unit just 18 months ago, and announced in January it would close three units.
- Menu items from CosMc’s menu — which served as a pilot for new beverage ideas and flavors — will be tested at hundreds of U.S. McDonald’s locations in the near future, the chain said.
- Earlier this year, McDonald’s announced it would form teams dedicated to specific food categories, including chicken, beef and beverage and dessert, in a push to overhaul menu strategy. The chain said in a release this new structure will help bring innovative drinks to a greater number of diners.
Dive Insight:
Prior to its announcement of CosMc’s wind-down, McDonald’s had begun shifting the chain away from larger-format stores in favor of more compact footprints.
The small number of CosMc’s restaurants and the flexibility of the format allowed McDonald’s to try its hand at premium beverages without impinging on the operations of existing restaurants. Ultimately, CosMc’s served as a consumer-facing testing environment, “which allowed for greater agility and speed. Quick adds and edits to the menu based on feedback led to more focused choices for our fans.”
Beverage is a hot category right now. On McDonald’s most recent earnings call, CEO Chris Kempczinski said the Golden Arches sees strong growth opportunity and attractive margins in drinks. He added that the chain is looking to drive incremental traffic and add beverages with a strong food attachment rate.
McDonald’s has seen same-store sales slip in three of the last four quarters, despite a national meal deal and value menu launch. While some of that is attributable to an E. coli outbreak in late 2024, the chain is taking active steps to draw consumers back in. McDonald’s announced on its Q1 earnings call that it would undertake a beverage test with some franchisees this year.
CosMc’s menu, when Restaurant Dive visited in May 2024, was saturated with sugary, cold drinks like a Churro Cold Brew Frappe and Sour Cherry Energy Burst. The brand offered customizations like boba or caffeinated syrup.
Competing fast food brands, such as KFC, are also using small numbers of premium units to test different menu configurations and beverages. KFC’s Saucy concept focuses on chicken tenders and sauces, but its menu includes teas, freezers and refreshers.
