McDonald’s developing new store format called CosMc's

McDonald's is developing a new type of store that it calls CosMc's, part of its plan to accelerate the rate at which it opens stores. CEO Chris Kempczinski announced CosMc's this morning during the company's earnings call. He did not give many details about the new format but said it would be tested in some markets early next year. “CosMc's is a small-format concept with all the DNA of McDonald's but its own unique personality,” he said. Ad Age Small Agency Awards See all of the 2023 winners Click here The name comes from a character in the company's fictional McDonaldland that appeared in the 1980s and 1990s. CosMc, an alien character, visited Earth to satisfy his cravings. The company announced earlier this year that it would start opening more stores around the globe. In the U.S., it would mark the first significant store growth for the Chicago-based hamburger giant since 2014. Kempczinski said growth in some international markets has also been “anemic.” In the U.S., McDonald's store footprint is more reflective of the population profile from 20 or 30 years ago, he said. “Imagine the amount of shifts—people moving to the South, to the Southeast. That's not reflected in our footprint,” he said. “You end up finding there's a number of places around the U.S. where we're significantly underdeveloped relative to where the opportunity exists today.” Considering smaller-format stores also opens up more real estate opportunities, he said. “A big reason we can now look at those is because of the growth that has happened with digital and delivery,” he said. “You don't necessarily need the big dining rooms.” Kempczinski said the company will give more details about CosMc's and its expansion plans at its investor day later this year. During the call this morning, he also discussed the possibility of rolling out some processes that are already in place in certain markets. For example, some stores in China use food lockers, where delivery people can pick up food from lockers without entering a busy store. McDonald’s second-quarter sales and profits surpassed analysts’ projections, a sign that it’s still attracting diners despite tighter household budgets and higher menu prices. The key metric of comparable-store sales rose 11.7% in the quarter, besting the 9.4% average estimate compiled by Bloomberg. In the U.S., McDonald’s benefited from “strategic menu price increases” and an advance in guest counts. Earnings of $3.17 a share, excluding some items, also exceeded expectations. Comparable sales in international markets also beat estimates, led by growth in the U.K., Germany and China. McDonald’s results point to the appeal of the chain’s offerings during economic uncertainty, even as the company charges more for its burgers and fries. Its delivery service in the U.S. also grew, even though it’s more expensive than in-person dining and customers at other chains have pulled back. In contrast with McDonald’s, fast-casual chain Chipotle Mexican Grill Inc. on Wednesday missed analysts’ estimates for same-store sales and revenue. The Chicago-based burger chain also touted “culturally relevant brand and marketing campaigns” as growth drivers. In June, a promotion including a purple shake celebrating the birthday of McDonald’s character Grimace took the internet by storm. McDonald’s said restructuring costs hurt earnings by 2 cents a share, or $18 million, before taxes. The company earlier this year announced a revamp that included the dismissal of hundreds of employees in a bid to reduce costs and accelerate decision-making, while also cutting the pay packages of some corporate staff. —Bloomberg News contributed to this report

McDonald’s developing new store format called CosMc's

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