McDonald's Corp (NYSE:MCD) announced on Wednesday that it will open the first location of its new spinoff brand CosMc’s this week in Bolingbrook, Illinois, a smaller-format concept store that will sell cold beverages including flavored iced teas and slushes.
The fast-food giant said it plans to open 10 CosMc’s locations, including nine restaurants in Texas, by the end of 2024 in its test program.
The company will then spend a year analyzing data to decide whether it will expand the small-format chain.
CosMc’s menu will include Egg McMuffins and M&M McFlurries plus new items such as Churro Frappes and pretzel bites.
"This is a $100 billion category growing faster than the rest of the [informal eating-out segment] and with superior margins," McDonald’s CEO Chris Kempczinski said in a statement.
Following the announcement, Bank of America analysts remained ‘Neutral’ on the stock, writing that the expansion of McDonald's specialty beverage and coffee offering (plus a limited food menu), is aimed at "growing share of the afternoon coffee occasion".
With drinks such as "Sour Cherry Energy Burst" and "Blueberry Ginger Boost", CosMc's could allow McDonald's to tap into the growing popularity of mixed cold beverages in the US, a trend that has boosted sales at coffee giant Starbucks, Reuters reported.
The new brand name comes from CosMc, a McDonaldland alien character from outer space that appeared in advertisements in the late 1980s and early 1990s.
McDonald's also outlined plans to open about 10,000 new stores worldwide by 2027, while accelerating the digitization of its business.
Shares of McDonald's edged up $0.28 to $287.10 in midday trading on Thursday and have gained 9% year to date.
Contact Sean at sean@proactiveinvestors.com