McDonald’s has begun to open the first locations of its experimental, retro coffee drive-through. CosMc’s is entering a crowded market, but may have a playbook for success.
The promise of galactic beverages drew hundreds to the Chicago suburb of Bolingbrook, Illinois, last Thursday. Customers queued for hours; some offered bribes to shorten their wait. Lines of cars snaked around the village of fewer than 80,000 residents, all in pursuit of one thing: a specialty sip from CosMc’s, McDonald’s new beverage concept store.
The restaurant, which was announced only a day before its soft opening on 7 December, is “rooted in beverage exploration”. Unlike a standard McDonald’s storefront, CosMc’s is drive-through only; the new approach also leans into what the company calls “bold and unexpected flavour combinations”: think specialty lemonades, cold-coffee concoctions and signature slushes. McDonald’s plans to open approximately 10 pilot locations in the US by the end of 2024.
It’s entering a crowded-and-growing market of fast-coffee heavyweights. According to data from Allegra World Coffee Portal, an insights platform focused on the coffee industry, the branded-coffee market currently stands 7% above its pre-pandemic size, with market leaders Starbucks and Dunkin’ projected to reach 16,144 and 9,434 US stores in 2024, respectively.
These numbers may be daunting for a new player in the fast-coffee space – but experts say CosMc’s may be poised to carve out its own place in the highly competitive landscape.
Finding a niche in a booming market
Andrea Hernandez, the founder of Snaxshot, a food-and-beverage insights platform, suggests CosMc’s may have something to offer Gen Z and Gen Alpha consumers (those born between 1996 and 2024).
“Starbucks was the millennial drink, but Gen Z is all about counter-culture – they’re looking for something else,” says Hernandez. Particularly appealing are “beverages that you can remix exactly how you like them”.
Nothing exemplifies that passion for personalisation quite like DrinkTok, a TikTok community, whose hashtag has more than 4 billion views. DrinkTokers have propelled specialty beverages, such as Starbucks’ Pink Matcha Drink, to viral fame – “hacking” menus with extensive customisations and showing off their creations. Curating CosMc’s offerings, McDonald’s seems to understand how critical is to tap into this consumer desire: the CosMc’s press release boasts “customisations at every turn: popping boba, flavor syrups, energy or Vitamin C shots, and so much more.”
CosMc’s menu also caters to younger generations’ taste for chilled drinks. Allegra World Coffee Portal CEO Jeffrey Young says the data shows “younger consumers prefer cold [beverages], while the older consumers prefer hot” – a phenomenon Hernandez calls “cold-beverage supremacy”.
Currently, the new chain’s menu features only six hot-coffee options, a selection of hot teas and a standard hot chocolate. The real focus, however, is on youth-centric cold drinks, with iced-coffee options including a S’Mores Cold Brew topped with toffee sprinkles, and an entire menu dedicated to slushes and frappés. The offerings also emphasise bold, fruity flavours popular with DrinkTokers.
Early buzz seems to indicate the formula is working. While the DrinkTok masses haven’t posted their favourite concoctions yet – possibly due to the flagship restaurant’s somewhat remote location in the centre of the US – the hashtag #CosMc already has 39 million views, and TikTok influencers are garnering hundreds of thousands of likes posting CosMc’s content.
‘A different type of drinker’
Although a newcomer to the branded-coffee market, McDonald’s isn’t exactly starting from scratch. It already knows plenty about coffee and its consumers through its McCafé coffee offerings, available in its US stores (McCafé also has a wide presence outside of the US as standalone locations). Some experts estimate McDonald’s sells upwards of a half-billion cups of coffee each year.
McCafé focuses on hot drinks like coffee and espresso, and also encourages customers to slow down and enjoy cushy seating and jazzy ambience based on old, iconic European coffee culture. The CosMc’s approach couldn’t be further from this model; instead, these new restaurants emphasise a speedy, playful experience – differentiation not only from its parent brand’s own McCafé, but also from CosMc’s competitors.
Hernandez says this attempt to take a new approach might be CosMc’s playbook for success. “Dunkin’ is about utility – ‘America runs on Dunkin’ – and Starbucks is more of a luxury-lifestyle brand,” she says. “To succeed, McDonald’s has to go toward a different type of drinker.”
To Allegra’s Young, that customer profile is obvious. “This new era of younger consumers wants things to be fun, they want things to be accessible, they want fast-paced service: things like using kiosks, ordering on your phone and using the drive-through,” he says. “[McDonald’s is] playing right into the hands of younger consumers.”
Those consumers, he argues, don’t need the emotional, cult-like attachment that drives millennial consumers to Starbucks and Dunkin’. They’re looking for indulgent, bold, highly individualised options in a uniquely convenient setting.
Will CosMc’s revolutionise the art of coffee as a direct competitor to Starbucks and Dunkin’? Maybe not – but, as Hernandez and Young both point out, it may not have to. The brand is putting younger consumers to the forefront, just as Gen Z and Gen Alpha start to gain purchasing power.
Says Young: “It could be a stroke of genius.”