Dive Brief:

• McDonald’s is developing a new, small-format restaurant concept called CosMc that it will test at a small number of locations in early 2024, CEO Chris Kempczinski said on the company’s Q2 earnings call Thursday.
• CosMc will have “all the DNA of McDonald’s but its own unique personality,” Kempczinski said. The name CosMc is a reference to CosMc the alien, a McDonald’s mascot that appeared in the chain’s advertisements in the 1980s and 1990s. 
• This concept appears to be an escalation of McDonald’s nostalgia-centered marketing strategy of the past few years. The celebration of mascot Grimace’s 52nd birthday was the theme of its Q2, and related advertising drove 3 billion TikTok views and contributed to 10.3% comparable sales growth in the U.S., the chain said.

Dive Insight:

The nod to a vintage mascot — and the operations and marketing muscle of the Golden Arches — could help CosMc stand out in the competitive QSR market. On the company’s earnings call, Kempczinski attributed strong marketing performance to increased enthusiasm about McDonald’s offerings, which could have a halo effect on the chain’s spinoff.

“The more customers love our brand, the more they love our food,” he said. 

But in the past few years, the space has become crowded with small-footprint models from major fast food chains. Even before the pandemic, restaurants were developing compact prototypes that reflected diners’ growing interest in carryout and delivery service. Panera, Chick-fil-A , Chipotle, Starbucks and more have experimented with small, delivery-only or off-premise-focused units in a bid to capture more diner traffic but keep overhead low.

Its unclear if CosMc will follow this off-premise-focused trend, or if it will be similar to McDonald’s Express units of the past, which were about half the size of a standard McDonald’s restaurant and are designed for urban markets with expensive real estate.

“A big reason that we can now look at [small formats] is because of the growth that's happened with the digital and delivery where you don't necessarily need the big dining rooms that you needed in our traditional restaurants,” Kempczinski said. “So you're now able to look at real estate sites that previously would have been sort of off limits to us those become opportunities.”

The company didn’t disclose operations details about CosMc on the call. McDonald’s will provide more information about the concept at the chain’s annual investor day toward the end of the year, Kempczinski said.

This isn’t the first time McDonald’s has tried to grow its restaurant portfolio. In the past, the company acquired Donatos Pizza and Boston Market and took a stake in Chipotle, but later shed all three investments to focus on the Golden Arches alone. 

Rival Chipotle also recently debuted a new brand in February. The fast casual chain is testing a concept called Farmesa Fresh Eatery at a Kitchen United Mix food hall in Southern California. It’s unclear, however, if Chipotle intends to operate Farmesa as a standalone restaurant chain or a virtual brand that can be served from existing Chipotle restaurants. Unlike McDonald’s, Chipotle has already launched a spinoff brand before. The company opened ShopHouse Southeast Asian Kitchen in 2011, but shuttered all of the concept’s 15 locations in 2017; Chipotle also invested in and later sold off Pizzeria Locale in 2013 and 2023, respectively.