Dive Brief:

• McDonald’s is opening its first CosMc’s restaurant — a small-format, beverage-forward concept — in Bolingbrook, Illinois, this week, CEO Chris Kempczinski said during McDonald’s Investor Day presentation on Wednesday. 
• The company will open 10 total CosMc’s restaurants by the end of 2024, and will test the units for at least one year before evaluating their performance, Kempczinski said. Nine units will be located in the Dallas-Fort Worth and San Antonio metro areas. 
• CosMc’s appears to be challenging Starbucks and other major chains, like Panera, that are innovating with caffeinated, non-coffee drinks. CosMc’s beverage menu includes iced tea, lemonade and slushes that can be caffeinated and highly customized with add-on ingredients. The concept also offers soft drinks and several hot and iced coffee beverages alongside select McDonald’s food products and signature food items. 

Dive Insight:

CosMc’s emphasis on hypercustomization mirrors Starbucks’ offer of personally tailored, complex beverages. The small-format restaurant could be a legitimate competitor for the coffee chain if scaled beyond the initial pilot, because Starbucks has struggled to balance the personalization its customers demand with its efforts to reduce employees stress.

“CosMc’s seamlessly blends brand-new, otherworldly beverage creations with a small lineup of food, including a select few McDonald’s favorites — all designed to boost your mood into the stratosphere, if only for a few moments,” the company wrote in a press release emailed to Restaurant Dive. 

It’s unclear how many employees each CosMc’s restaurant will staff, but in a video presentation detailing CosMc’s operations, McDonald’s said “the crew is able to flex across roles” thanks to a “streamlined labor model.” Starbucks is preparing to roll out its Siren System, a kitchen operations overhaul which is designed to bolster cold beverage assembly, on a large scale in 2024 and 2025 to take pressure off of its workers. 

CosMc’s most complex cold beverages offer up to nine categories of customization. For example, the Berry Hibiscus Sour-Ade allows customers to select how much ice they want, and if they would like to add dried dragonfruit, dried blueberries and dried strawberries or remove dried lemon wheels. Additionally, customers can select two fruit syrups from a lineup of eight options; a boost, such as an “Energy Shot,” “Pre-Workout Shot” and Vitamin C Shot;” and fruity boba and sweet popping boba. 

The restaurant’s hot beverages offer even more customization opportunities — the most complex drinks include 15 personalization category opportunities. For example, the Tumeric Spiced Latte lets customers select one of four milk options; up to eight flavored syrup options (that can be “Lite” or “Extra”); an espresso shot; black pepper sprinkles; up to 10 servings of three sweeteners (liquid cane syrup, Splenda and sugar); hot foam; whipped cream and a temperature of choice (“Not Too Hot” or “Extra Hot”).

Though these beverages offer many more permutations than McDonald’s drink menu, they don’t match or exceed the number of customizations Starbucks customers can request. The coffee chain’s Iced Toasted Vanilla Oatmilk Shaken Espresso, for example, includes a whopping 20 points of personalization — including coffee roast selection and the option to blend. 

CosMc’s menu also includes sandwiches, snacks and sweet and savory “Bites” that could compete with Starbucks’ growing food menu. On an investor call last month, Starbucks CMO Brady Brewer said “in service of driving afternoon and all-day visits,” the company “will expand with new all-day snacking platforms and introduce an elevated fresh-baked offering over time.”