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Can CosMc’s success propel McDonald’s stock to $350?

Can CosMc's success propel McDonald's stock to $350?

CosMc’s, the drive-thru-only concept by fast food giant McDonald’s (NYSE: MCD) that opened in December 2023, has experienced increased traffic surpassing that of a typical restaurant chain owned by the parent company.

In particular, data from the business insights platform indicates that CosMc’s witnessed over three times the foot traffic per square foot compared to typical McDonald’s outlets. The outlet in Chicago, with an area of 2,500 square feet, stands out, especially compared to the average McDonald’s size, which ranges between 4,000 and 4,500 square feet. noted that at one point, approximately 80 vehicles were waiting in line upon arrival, necessitating a separate parking lot at a nearby shopping center. Despite recording higher traffic, data on the number of orders fulfilled by the outlet are unclear. 

CosMc’s selling points 

The CosMc’s menu features a variety of savory and sweet snacks such as pretzel bites, hash browns, and caramel fudge brownies. The establishment also promotes its ice cream offerings to remedy the “3 p.m. slump.” Notably, the menu has been one of the reasons why the outlet has generated significant profits in a short period.

CosMc’s is particularly interesting because it targets a younger demographic, with the potential market trade area skewing towards the 22–29-year-old cohort.

The findings could indicate the initial success of the outlet, considering that McDonald’s plans to open an additional 10 CosMc’s test units by the end of 2024, including locations in fast-growing markets.

CosMc’s approach is part of McDonald’s initiative to differentiate its coffee business and connect with a younger audience while aiming to build a brand in the competitive coffee category to Starbucks.

Impact on MCD stock

Indeed, the success of CosMc’s could serve as the catalyst to boost the restaurant’s stock. MCD has been under pressure in recent months, primarily consolidating within a tight range of $290 to $300.

By press time, MCD was valued at $292.26, experiencing year-to-date losses of approximately 1.6%.

MCD seven-day stock price chart. Source: Finbold

With the business appearing to thrive after the spinoff, MCD investors are hopeful that it will generate more profits in the upcoming months, potentially impacting overall growth. This optimism is reinforced by McDonald’s ambitious plan to expand from 41,000 to 50,000 restaurants by 2027.

Meanwhile, as the fast-food industry grapples with challenges such as tightening consumer budgets, rising costs, and uncertainties related to the impact of weight loss drugs, industry analysts project growth for MCD in the coming months.

Analysts take on MCD

Specifically, based on MCD’s last three-month performance, 29 Wall Street analysts offering a 12-month forecast project McDonald’s will trade at an average price of $323.39, with a high forecast of $383 and a low forecast of $291. The average price target reflects a 10.65% change from the last recorded price of $292.26.

MCD 12-months stock forecast. Source: TipRanks

In anticipation of the next stock trajectory, investors will closely monitor the company’s plans when it releases its latest quarterly results on February 5.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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