Dive Brief:
- McDonald’s will test new beverages later this year in some of its existing restaurants, CEO Chris Kempczinski said Thursday during an earnings call.
- The new menu items will be inspired by CosMc’s, a beverage-focused concept McDonald’s has tested in select markets, including Texas. CosMc’s has led McDonald’s to better understand diner customization preferences and emerging beverage categories, he said.
- The company sees a lot of potential growth in beverages, which tends to be a profitable channel, Kempczinski said. The segment is one of the three core categories for McDonald’s menu innovation, alongside beef and chicken.
Dive Insight:
Expanding its drink line could also help the chain boost traffic, which dropped during the first quarter following a pullback in spending from low- and middle-income households. The chain’s three new menu innovation verticals should help it compete against chains that specialize in areas such as chicken or beverages, Kempczinski said.
“The opportunity for us is to have teams that have that degree of focus, who are waking up every single day, looking at our performance across the globe and making sure that we absolutely are winning in chicken, that we’re winning in beverages, that we’re winning in beef or continue to win in beef,” he said.
While McDonald’s currently has about a 10% market share in coffee, Kempczinski believes the chain could do better. There are also opportunities in energy drinks, which McDonald’s doesn’t really serve beyond what is offered at CosMc’s. The beverage concept has grown to a handful of units across Texas and Chicago since 2023 and offers a wide range of customizable items, from coffee and tea to energy drinks, alongside a small menu of snacks.
“Part of what we’ve tried to be thinking through is, how do we get after that opportunity,” Kempczinski said. “Part of the impetus for us to go do CosMc’s was a belief that if we tried to do it within an existing restaurant that the complexity may be too great and would impact speed of service.”
One of the lessons from CosMc’s is the relationship between customization and core recipes. Customers tend to prefer 80% of the in-recipe ingredients and customize the rest. What the chain learned is the risk of complexity attached to customizations wasn’t as great as they originally believed.
Management also learned that consumers will want to buy food if a concept is attached to the McDonald’s brand, Kempczinski said.
“All of that is informed now,” he said. “Let's take that into a McDonald's restaurant and see what an expanded lineup of beverages could look like, and let's understand what that means in terms of driving incremental traffic, but also food attachment that goes with that.”
Kempczinski added that the chain would share more information on the beverage tests later in the year.
