In this YouTube commentary, the speaker examines McDonald's short‑lived beverage‑focused spin‑off brand CosMc's, which opened around 2023 as a specialty drink‑first restaurant with light snacks. After launching roughly 70‑80 locations—a tiny fraction of McDonald’s global footprint—the chain announced the closure of all CosMc's sites less than two years later. The video outlines the competitive context (Dutch Bros, Seven Brew, Scooters, Fizz, etc.), explains why a giant like McDonald’s would experiment with a separate brand, and distills two strategic lessons the company likely learned: (1) the high‑margin, high‑volume drinks market is driven by a few core SKUs, not a broad menu, and (2) such a market is not a distinct category for McDonald’s but an extension that can be integrated into its existing restaurants. The speaker argues that the experiment was smart, providing data that will allow McDonald’s to fold popular drinks into its core menu rather than maintain a separate brand, and invites viewers to share their own experiences with CosMc's or competing chains.
Chapters
There's a pretty interesting news article out today about McDonald's. And McDonald's a couple years ago had launched a new beverage concept called CosMc's. And the idea of CosMc's that you would have this kind of specialty restaurant that would focus on drinks first and foremost and have light snacks that would go with it. And the idea was to compete with kind of the emerging sugary coffee chains and these kind of fast food beverage style restaurants like Fizz and Dutch Brothers and Scooters and Seven Brew and stuff like that that have been popping up like crazy all over the US. After opening about 7, 8 dozen or so of these CosMc restaurants, which is just a drop in the bucket compared to how many hamburger places McDonald's has, right? Tens of thousands globally. Today, the corporation announced they were closing down all of these CosMcs, just totally giving up on the idea.
Fewer than 2 years after opening, the CosMc's concept restaurant in Bolingbrook is shutting down. There was huge fanfare when the McDonald's spinoff launched in 2023. Remember that? The line was like hours long. It focused on unique drinks and other things. Tonight, McDonald's says it's closing all locations, but many of those beverages will eventually show up at McDonald's restaurants.
Why would a big corporation like McDonald's even try something like this? And then ultimately, like, why would they shutter it all just a couple years later? It just all kind of doesn't make sense in retrospect. It turns out what McDonald's learned through this process of opening these up, I think, was two things that were really important lessons. So I'll explain those in the concept of talking about how a company like McDonald's would see a concept like Dutch Bros or Seven Brew or Scooters come along and then launch something like CosMc's to try to, well, figure out their strategy to deal with the space. And so ultimately, like, executives at a company like McDonald's would've seen a Dutch Bros, a Seven Brew, Scooters, these guys just exploding. And if you've ever been out to the West Coast and you've seen a Dutch Bros, it is unbelievable what kind of volumes these drive-through coffee places will do out there. There are just so many rabid fans wanting to buy sugary drinks that are caffeinated. And frankly, it's a lot of teenagers and early 20-somethings in line. And if you're McDonald's, you can see what's happening, right? You can see people are changing their buying behaviors. And those young people who are young today are going to grow up older. So there's a worry that the Dutch brotherification of kind of the drive-through market and the drink market, eventually that could come to affect the McDonald's business too. So when something like this happens to an established chain like McDonald's, you'll see kind of two different reactions. One is they'll go out and they'll say, hey, we're going to start adding those kind of drinks themselves to our broader chain. Hey, we'll roll out the type of things that are offerings that Dutch Brothers has, and we'll put all that stuff and shove it into our existing restaurants and existing McDonald's. Frankly, that tends to be the wrong strategy because you end up with restaurants like Jack in the Box or Dairy Queen that tend to just be everything to everyone and not good at any one particular thing. Or you'll see the second option, which is what McDonald's did, which was basically launch a whole different brand. And at their scale, they can afford to do that, right? They have tens of thousands McDonald's around the world. Going to open up a couple dozen of these cosmic alternative options and seeing what they can learn about the market, well, that doesn't risk their broader business. And that's what they did. So they actually opened up a few of these Cosmics here in San Antonio near me. I never went to one. I just make videos. I don't actually go out and look at anything. But, you know, I'll tell you what I figured out that they learned. And that's because I was in this business competing with Dutch Bros and 7 Brew and folks like that in the past. And what I guarantee they learned after launching Cosmix is exactly what Dutch Bros and these other guys have figured out. Even though the menus are big at all these places, there are 2 to 3 items at a place like Dutch Bros or any of these drive-through coffee places that are driving the vast majority of revenue and vast majority of profits. And when we had our drive-through coffee chain, about 50% of the sales were one particular drink, and I'll tell you what it is. It's a caffeinated Frappuccino with caramel and chocolate syrup in it. And if you go ask any of the different drive-throughs— Seven Brew, Scooter's, Dutch Bros, Cosmics— like, that's the thing people want to buy. Creamy, full of fat, slightly salty. Americans love it. Well, because it's ridiculously unhealthy. And if you go look at the articles, and then I'll put a link to the one in the Wall Street Journal that I saw today about the closing of Cosmics, McDonald's public statement about why. Well, they're pretty truthful. They said, "We learned some stuff." And I guarantee what they learned was this isn't a new category for McDonald's. And they could take 80% of the profits and the revenue that they want to get in terms of attacking this market of people who are buying, well, basically just a couple SKUs and just put those into their broader restaurants and do even better than if they were to set up a new brand. Because ultimately what they learned there was this drive-thru stuff wasn't a new category for McDonald's. It wasn't something that they needed to try to compete in that way. It was just going to be something that was an extension of their core restaurants. And look, I think what they did was super duper smart. They ran this experiment with CosMc's, learned some data about it, and that was enough to tell them everything and anything they needed to know about developing their strategy for the mothership of McDonald's itself. Ultimately, CosMc's is just representing something that isn't an entirely new category in food. It's just something that's going to be a brand extension for McDonald's. And when I see stuff like this and I saw how McDonald's handled it, just total genius, really good. And it looks like they've got good management in place because this turned out to just be a really smart decision. So anyway, if you've been to CosMc's, let me know what you think. Or if you've been to Dutch Bros, let me know what you think. And if you're a restaurant nerd and you know more about the restaurant business than I do, tell me in the replies below. I'll catch you later.
