Innovation seems to be the buzzword among fast-food giants, and McDonald's has taken this trend to heart by unveiling a massive announcement it had secretly been planning for years.
Although McDonald's is the biggest fast-food giant of them all, it's currently facing its worst quarter since the pandemic. Continuous sales drops and declining traffic that failed to meet analysts' expectations have caused its shares to plummet multiple times.
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However, it refuses to give up that easily, and one market could be the key to bringing business back on track.
McDonald's claims to already have around 10% market share in coffee, despite not being a coffee-focused chain, and it's now using this stat to its advantage.
McDonald's launches CosMc's, an innovative spin-off chain
McDonald's (MCD) introduced CosMc's in 2023 and opened its first-ever location in Illinois as a test run for this new idea.
CosMc's is a space-themed café focusing on uniquely crafted beverages, including coffee, frappés, iced teas, lemonades, and energy drinks. It also has multiple breakfast items, including its iconic McMuffins and new specialty sandwiches, as well as baked goods, snacks, and soft-serve ice cream.
The concept went viral on social media before the café even opened, making its debut a huge success and growing its demand. This led it to open five more locations, one in Illinois and the rest in Texas.
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The creation of CosMc's allowed McDonald's to quietly test innovative items, while analyzing operations and learning from the process.
As more CosMc's opened, the company revealed it was considering using that feedback to revamp its original menu, alluding to the potential launch of new food and beverage additions.
McDonald's is shutting down all its CosMc's locations
McDonald's announced on May 23 that it will close all its CosMc's locations and deactivate its spin-off app in June.
This shocking move comes about after McDonald's revealed in early May that it would begin testing an entirely new beverage menu inspired by CosMc's later this year at various locations in select markets nationwide.
This is part of a new menu innovation strategy to help the company better compete against its fast-food rivals after it has dealt with multiple sales declines over the last few quarters.
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McDonald's also introduced new “Category Management” teams in March, focusing on beef, chicken, and beverages/desserts to boost this initiative.
“So when you think about profit-pool growth in the industry, we expect beverages is going to be a place where there’s significant growth in the profit pool,” said McDonald's CEO Chris Kempczinski in the announcement. “Frankly, we think there’s more that we can be doing to capture our fair share of that,” he added.
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