McDonald’s to Open CosMc’s, A Smaller Spinoff Restaurant

McDonalds Raises Royalties

Test Sites Will Open in Early 2024, CEO Kempczinski Announces

McDonald’s will launch its new restaurant concept CosMc’s as part of its goal to expedite store openings. CEO Chris Kempczinski announced CosMc’s on Thursday, saying it’s “a small-format concept with all the DNA of McDonald’s but its own unique personality.” The Chicago-based burger giant will test the concept at a handful of sites within “limited geography” starting early next year.

CosMc’s is named after a character in McDonaldland who made appearances during the 1980s and 1990s, Ad Age reported. CosMc, an alien character, visited Earth to satisfy his cravings.

Where McDonald’s May Expand

Earlier in 2023, the company had outlined plans this year to open more stores globally. Domestic expansion had fallen for nearly a decade, and Kempczinski labeled growth in some international markets as “anemic,” Ad Age said. McDonald’s locations haven’t kept up with population shifts during the past 20 or 30 years, he said during the June earnings call.

“Imagine the amount of shifts — people moving to the South, to the Southeast. That’s not reflected in our footprint. There are a number of places around the U.S. where we are significantly underdeveloped relative to where the population exists today. That opens up a whole bunch of development opportunities for us to go after,” Kempczinski said in a CNN Business report detailing the earnings call.

And there are more real estate opportunities with smaller stores, Kempczinski pointed out. “A big reason we can now look at those is because of the growth that has happened with digital and delivery. You don’t necessarily need the big dining rooms.”

Will Consumers Support CosMc’s?

CosMc’s will go live amid consumer concerns about inflation and other economic variables. “There is certainly concern with the U.S. consumer that shows up in their sentiment,” Kempczinski said, but he predicted McDonald’s is up for the challenge. 

“Our value positioning in the market has put us into a good position to be able to weather that.” Some diners already have gravitated toward McDonald’s from full-service or fast-casual restaurants, he added. Kempczinski said the company will give more details about CosMc’s and its expansion plans at its investor day in December. 

In Other News from McDonald’s

  • The burger chain credited “culturally relevant brand and marketing campaigns” for its growth. In the second quarter, that marketing included a huge hit with the return of Grimace, who, like CosMc, is another alien McDonald’s character. Last month, a promotion including a limited-time purple shake that marked Grimace’s birthday was widely splashed around social media and helped to increase McDonald’s second-quarter revenue above expectations. Comparable-store sales rose 11.7%; Bloomberg had predicted 9.4%.

Kempczinski said: “This quarter, the theme is — well, if I’m being honest, the theme was Grimace. Grimace has been everywhere in the past few months … this viral phenomenon is yet another proof point of the power of marketing at McDonald’s today.”

Also during the earnings call, McDonald’s Chief Financial Officer Ian Borden said Grimace’s birthday “quickly became one of our most socially engaging campaigns of all time.” 

  • The costs of this year’s restructuring, which included employee layoffs, dinged earnings 2 cents a share, which equates to $18 million before taxes. 
  • Kempczinski said McDonald’s may adopt processes already being used in other markets. For instance, some McDonald’s sites in China place orders in food lockers so delivery people can grab them and go without wading through a crowded restaurant. 
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Mary Vinnedge is an award-winning writer who has served as editor in chief, managing editor and senior editor at national and regional publications, including SUCCESS and Design NJ magazines. A seasoned journalist, Mary covers the latest franchising news in her role as staff writer for FranchiseWire.
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