McDonald's shuts down its spin-off, CosMc's, after less than 3 years as sales lag
McDonald's announced on Friday that it is closing its CosMc's spin-off line of Starbucks-style drink shops.
McDonald's CEO Chris Kempczinski said in the company's last earnings call that drinks from CosMc's would be introduced to "hundreds of McDonald's restaurants" in the future.
"In connection with this next phase of testing, we will begin closing all stand-alone CosMc's pilot locations in late June, and the CosMc's app will be discontinued," a McDonald's spokesperson told Business Insider.
When it opened in 2023, CosMc's drew comparisons to Starbucks. Its menu included coffees, teas, lemonades, slushes, breakfast sandwiches, and small donut-like pastries called "McPops."
In a December 2023 meeting with investors, Kempczinski said that CosMc's is a "small format concept with all the DNA of McDonald's but its own unique personality."
"Its menu includes new customizable drinks, sweet and savory treats and familiar favorites such as the Egg McMuffin," Kempczinski said in the meeting.
In its announcement on Friday, McDonald's said CosMc's served as a good testing ground for different new flavors, and it plans to blend the "out of this world tastes" of CosMc's drinks into "the McDonald's experience."
"What started as a belief that McDonald's had the right to win in the fast-growing beverage space quickly came to life as a multi-location, small format, beverage-focused concept," the company said. "It allowed us to test new, bold flavors and different technologies and processes — without impacting the existing McDonald's experience for customers and crew."
The closing of CosMc's comes as McDonald's faces its lowest sales since the COVID-19 lockdowns. US same-store sales at McDonald's declined 3.6% during the first quarter.
With low-income diners pulling back their spending over the past year due to economic uncertainty, McDonald's saw even more middle-income buyers do the same during its first quarter, Kempczinski said in an earnings call.
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