McDonald’s (NASDAQ: MCD) is creating a spinoff restaurant chain called CosMc’s, executives said during the second-quarter earnings call.
“CosMc’s is a small format concept with all the DNA of McDonald’s, but with its own unique personality”, said Chris Kempczinski, McDonald’s CEO.
The company will test CosMc’s in a few locations within “a limited geography” in early 2024, and it will disclose more details about the initiative during its investor’s day conference next week.
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The new CosMc’s restaurant concept will mainly offer beverages and smaller snacks, positioning itself as “a kind of a competitor to Starbucks”, wrote Evan, a market analyst on X.
McDonald’s is reviving CosMc, a lesser-known vintage McDonaldland character, first featured in “The Story of CosMc” in 1987, hoping to replicate the success of its recent Grimace-themed marketing campaign, which revitalized sales in the US.
Could MCD win the coffee war?
Mcdonald’s is making a mistake by trying to compete with Starbucks (NASDAQ: SBUX) and Dutch Bros (NASDAQ: BROS) for a share of the coffee shop industry, argue some critics.
They believe that McDonald’s is a fast-food chain known for its cheap and quick food, while Starbucks and Dutch Bros are known for their trendy and upscale coffee drinks, so McDonald’s should stick to its core strengths.
The new venture of the company might prove lucrative, but it’s still in an early stage of its development, and more information about the company’s objective, menu and launching locations will be released in the coming months as the company gets closer to the launch day.
MCD outperform Starbucks in year-to-date stock returns
McDonald’s reported impressive financial results for Q3 of 2023, driven by continued growth in global same-store sales. Revenue jumped 14% to $6.69 billion, while net income surged 17% to $2.3 billion. Same-store sales increased by 8.8%, reflecting robust comparable sales across all segments.
Also, MCD has outperformed Starbucks by 5.6% in year-to-date (YTD) stock returns, with it returning 6.5% and SBUX returning 0.9%.
McDonald’s further demonstrated its commitment to growth by announcing plans to open 1,500 new restaurants worldwide in 2024.
This expansion is expected to be fueled by growth in key markets such as China, India, and Brazil, and is testing new concepts, such as McCafé McCoffee bars, to attract new customers and expand its revenue streams.
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