The start of any month is supposed to be exciting. This is especially true for May, since it means we are one month closer to sunny summer days. However, a persistent, gloomy cloud has hung over McDonald’s for several months.
McDonald’s troubles seem to keep growing. It’s now facing its worst quarter since the pandemic, with continuous sales drops and declining traffic that failed to meet analysts’ expectations, causing McDonald’s shares to fall.
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The fast-food giant’s U.S. comparable sales were down 3.6% in the quarter and 1% globally, with systemwide sales decreasing 1%, according to its first-quarter earnings report for fiscal 2025.
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Although the results were not as positive as expected, one market could be the saving grace that may return its business to growth.
McDonald’s claims to already have around 10% market share in coffee, despite not being a coffee-focused chain. However, the company has shown that it refuses to settle for anything but the best.
Menu items from McDonald’s spin-off restaurant brand, CosMc’s.
Image source: The Washington Post/Getty Images
McDonald’s launches CosMc’s to test out innovative menu items
To better understand the beverage market and test new products, McDonald’s (MCD) launched CosMc’s in 2023.
This spin-off concept is a space-themed café focusing on uniquely crafted beverages, including coffee, frappés, iced teas, lemonades, and energy drinks. It also has multiple breakfast items, including its iconic McMuffins and new specialty sandwiches, as well as baked goods, snacks, and soft-serve ice cream.
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The concept went viral on all social media platforms before the café even opened, making its debut a massive success. Demand for CosMc’s continued, which led it to open five locations, one in Illinois and the rest in Texas.
This years-long momentum allowed McDonald’s to test which items CosMc’s customers preferred, while analyzing operations and learning from the process.
As more CosMc’s opened, the company revealed it was considering using that feedback to revamp its original menu, alluding to the potential launch of new food and beverage additions.
McDonald’s reveals a huge innovative menu change
Less than two years after starting its spin-off journey, McDonald’s announced that it will begin testing an entirely new beverage menu inspired by CosMc’s later this year at various locations in select markets.
Introducing CosMc’s-inspired beverages to McDonald’s menu is part of a new menu innovation strategy to help the company better compete against its fast-food rivals.
In March, McDonald’s introduced the new “Restaurant Experience Team,” along with three new global “Category Management” teams focusing on beef, chicken, and beverages/desserts to further specialize innovation within its food products.
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While testing CosMc’s, McDonald’s discovered that many customers tend to customize around 20% of an original item. It also found that when a product has a McDonald’s brand attached, the consumer will want to buy food alongside it.
However, McDonald’s also found downsides that make it difficult to incorporate CosMc’s menu into the larger chain. One challenge is the complexity of preparing CosMc items, which could negatively impact efficiency and speed.
“So when you think about profit-pool growth in the industry, we expect beverages is going to be a place where there’s significant growth in the profit pool,” said McDonald’s CEO Chris Kempczinski. “Frankly, we think there’s more that we can be doing to capture our fair share of that,” he added.
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