Nearly six months since\u00a0McDonald\u2019s\u00a0opened its first CosMc\u2019s location, the hours-long drive-thru lines have died down, but the chain is just getting started.<\/p>\n
The\u00a0burger giant created\u00a0the spinoff using one of its lesser-known McDonaldland mascots, CosMc, an alien who loves McDonald\u2019s cheeseburgers. While unveiling CosMc\u2019s at an investor event in December, McDonald\u2019s CEO Chris Kempczinski said the company set out to create a brand that could sell customizable drinks and coffee popular in the afternoon segment to attract younger consumers.<\/p>\n
The new brand rollout comes as beverages are increasingly\u00a0<\/strong>\u201clooked at now as part of that snack area \u2014 more affordable, indulgent and perhaps even a healthier treat,\u201d said Katie Belflower, an editor at restaurant research firm Technomic. \u201cIt\u2019s a good profit margin for\u00a0restaurants. With beverages, you can get really creative, without necessarily having the product lines that you would have to invest in with food.\u201d<\/p>\n Since opening the initial location in the Chicago suburb of Bolingbrook, McDonald\u2019s has opened three more CosMc\u2019s restaurants, all in Texas. For now, the chain is planning to open 10 locations by the end of this year for a test run, with all but one located in the Lone Star State.<\/p>\n In another sign of the new brand\u2019s expansion, it will launch its own mobile app and loyalty program, called CosMc\u2019s Club, on Tuesday. Customers can use the app to place orders that they pick up either inside the restaurant or in the drive-thru lane. And loyalty program members earn 10 points for every dollar they spend; once they rack up 400 points, they can redeem them for $2 rewards.<\/p>\n While the long-term fate of CosMc\u2019s is still too soon to tell, the gamble could pay off for McDonald\u2019s even if the spinoff never makes it past the 10-location test phase. The app and loyalty program will give the chain even more consumer insight.<\/p>\n \u201cThe cost of doing this, to McDonald\u2019s, is a rounding error. Even if they shut them all down six months from now, they still learn some things. Sometimes the learnings can be more valuable than you might imagine they would be,\u201d Mark Kalinowski, restaurant industry analyst and chief executive of Kalinowski Equity Research, told CNBC.<\/p>\n At McDonald\u2019s December investor presentation, Kempczinski downplayed the short-term effect of CosMc\u2019s.<\/p>\n \u201cLet me emphasize again, we\u2019re talking about 10 stores,\u201d he said at the event. \u201cThe big story isn\u2019t about CosMc\u2019s, per se. The big story is what it says about McDonald\u2019s and our potential.\u201d<\/p>\n But for many consumers, CosMc\u2019s was the headline. When the first location opened days later in Illinois, eager customers waited for hours in drive-thru lines that dragged around the shopping center for the chance to buy McPops and Churro Frappes.<\/p>\n Weeks later, the buzz had started dying. According to Intouch Insight, the\u00a0average wait time\u00a0from entering the CosMc\u2019s drive-thru line to reaching the speaker to order was 11 minutes and 13 seconds, based on visits from mystery shoppers in January and February. But the average service time, after ordering, was just four minutes and one second, trailing the industry benchmark by just six seconds.<\/p>\n On a Monday afternoon in May, there was no line for this CNBC reporter to reach one of the four drive-thru intercoms to place an order.<\/p>\n Investors\u2019 interest has also cooled as other parts of McDonald\u2019s business draw more attention.<\/p>\n \u201cSix months ago, there was a lot of curiosity, but now that you\u2019ve seen McDonald\u2019s same-store sales decelerate, that\u2019s where my clients\u2019 focus is,\u201d Kalinowski said.<\/p>\n In the first quarter,\u00a0McDonald\u2019s reported\u00a0U.S. same-store sales growth of 2.5%, a slowdown as price increases fade and diners pull back their restaurant spending.<\/p>\n From the outside, the CosMc\u2019s location in Bolingbrook isn\u2019t much to look at. Four drive-thru lines await customers to place their orders. The building\u2019s indigo exterior features the brand\u2019s name \u2014 but no sign of its namesake mascot.<\/p>\n In fact, while CosMc plays an outsize role in the brand\u2019s\u00a0fictional origin story\u00a0on the CosMc\u2019s website, he\u2019s basically invisible from its branding or restaurant.<\/p>\n \u201cHe is not as well-known of a character,\u201d Belflower said. \u201cI think that\u2019s almost to their benefit, because people can understand how CosMc\u2019s is different from McDonald\u2019s itself \u2014 but it still has a retro font and coloring and things like that, so I think all of that helps tie it into the nostalgia.\u201d<\/p>\n CosMc\u2019s absence could also be due to the fact that the chain\u2019s target customer likely wasn\u2019t born yet when McDonald\u2019s advertisements featuring CosMc aired in the \u201980\u2032s and \u201990\u2019s.\u00a0<\/p>\n \u201cJust in looking at the menu, it looks like it\u2019s designed for half my age and under,\u201d said Kalinowski, whose industry experience spans more than two decades.<\/p>\n CosMc\u2019s customers can choose from a vast array of drinks and a smaller snack menu. Sour Cherry Energy Burst, Island Pick-Me-Up Punch and Popping Pear Slush are among the beverages that McDonald\u2019s created specifically for the chain.<\/p>\n Drinks, like a Tropical Spiceade, can be customized with \u201cboosts,\u201d like a vitamin C shot or an energy shot, tapioca pearls known as boba or a choice of eight different syrups. The chain also offers coffee drinks \u2014 like its Churro Cold Brew Frappe, whose largest size contains nearly five times the amount of caffeine found in an average cup of brewed coffee.<\/p>\n CosMc\u2019s is also the latest example of a beverage-focused restaurant that doesn\u2019t just sell coffee. There\u2019s Utahan soda chain Swig, now majority-owned by Larry Miller\u2019s family office.\u00a0Dutch Bros\u00a0gets about a quarter of its sales from its Blue Rebel energy drink. And\u00a0Starbucks\u2019 Refreshers, first introduced a dozen years ago, are the chain\u2019s fastest-growing beverage category in the U.S., with new spicy flavors available this spring.<\/p>\n Non-coffee drinks tend to appeal more to consumers looking for a pick-me-up in the afternoon. While they still might want caffeine, a flavored beverage like a Blueberry Ginger Boost from CosMc\u2019s might be more appealing than another coffee.<\/p>\n CosMc\u2019s level of customization would be difficult at a traditional McDonald\u2019s because it would slow down its drive-thru lanes too much. For example, Starbucks has credited the shift to cold drinks and pricy customizations, like cold foam, for its sales growth in recent years, but both customers and baristas have griped about complicated orders slowing service too much.<\/p>\n One way to speed up CosMc\u2019s service could be using its digital menu boards differently. The CosMc\u2019s menu board plays ads until a car pulls up next to the nearby intercom, leaving customers little time to ponder the menu of more than 70 drinks and food items. The launch of mobile and online ordering will likely also help speed up wait times.<\/p>\n Once customers finish ordering, they can pay at the speaker or wait to pay with a cashier at the pick-up window. CosMc\u2019s also has customers wait by the intercom where they ordered until their order is ready to pick up. The menu board relays what pick-up window to drive up to grab the order.<\/p>\n Envisioned as a small-format location, CosMc\u2019s doesn\u2019t offer any in-restaurant seating, leaving it up to customers to sit in the 10-spot parking lot or keep driving. The Bolingbrook CosMc\u2019s, a former Boston Market location, is much larger than McDonald\u2019s intends for the rest of the brand\u2019s locations. But with empty real estate, a 45-minute drive from the company\u2019s Chicago headquarters and a traditional McDonald\u2019s right next door, it makes sense why the company chose that location as the first spot for the spinoff.<\/p>\n But the location\u2019s history is also a warning for McDonald\u2019s. The company bought Boston Market out of bankruptcy in 2000, intending to use its real estate. But it instead kept running the brand.<\/p>\n Seven years later, McDonald\u2019s sold it off, following a broader divestment in other secondary brands like Chipotle Mexican Grill. At the time, McDonald\u2019s sales were struggling, and executives blamed some of its woes on a lack of focus.<\/p>\n<\/p>\n Nearly six months since\u00a0McDonald\u2019s\u00a0opened its first CosMc\u2019s location, the hours-long drive-thru lines have died down,…<\/p>\n","protected":false},"author":0,"featured_media":611,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-610","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/posts\/610","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/comments?post=610"}],"version-history":[{"count":0,"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/posts\/610\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/media\/611"}],"wp:attachment":[{"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/media?parent=610"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/categories?post=610"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradetrovex.com\/index.php\/wp-json\/wp\/v2\/tags?post=610"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}