STiR coffee and tea magazine

22 STiR coffee and tea | 2024 Issue 1 (February / March) M By: Diana Jendoubi cDonald's is starting 2024 with a revolutionary new concept aimed at captur- ing emerging Gen Z and Gen Alpha consumers. CosMc's, a specialty bev- erage and coffee spin-off that recently opened outside of Chicago, IL, is a massive departure from McDonald's traditional QSR framework. Instead of focusing on food, CosMc's offers an 'out-of-this-world' customizable drink and snack menu backed by a speedy and convenient service model. In the age of social media and food- ordering apps, McDonald's is out to prove that it can adapt and conquer. Mickey D's wants a piece of the Specialty Beverage pie The Specialty Beverage and Coffee market is currently one of the fastest-growing markets. SCA recently reported that US consumption of specialty coffee in 2023 has reached over a five-year high. Some are predicting that the North American specialty coffee market will continue to grow by 20% for the next several years. With numbers as impressive as these, McDonald's has clearly taken notice. CEO Chris Kempczinski recently told investors "One area of focus has been identifying ways for McDonald's to participate in attractive and fast-growing categories … we've homed in on specialty beverages and coffee." Emphasizing that the $100 billion specialty beverage and coffee retail category "Is growing faster than the rest of the [informal eating-out segment] and with superior margins… It's a space we believe we have the right to win." McDonald's new specialty beverage and coffee spin-off CosMc's is looking towards the future. Will CosMc's Captivate Gen Z and Alpha? Bold flavors, fun add-ons, and vibrant colors are exactly what DrinkTokers love to post about. As a result of innovations in digi- tal food and delivery apps, CosMc's has opted to eliminate in-house dining and is drive-through only. This allows them to operate in spaces that are much smaller than a traditional McDonald's. A prospect that Kempczinski finds very exciting. "How do we bring new concepts that open up real estate oppor- tunities that under a traditional model would not necessarily be available to us?" This summer he shared his optimism with investors. "A big reason that we can now look at those is because of the growth that's happened with digital and delivery where you don't necessarily need the big dining rooms that you needed in our traditional restaurant. So you're now able to look at real estate sites that previ- ously would have been sort of off-limits to us. Those become opportunities." After holding its first investor day in three years, McDonald's also shared that it plans on investing over $1 billion in opening 1,900 new stores worldwide. With 400 of those locations slated for the US, UK, Canada, and Europe. Spending habits are changing Before it was enough for fast-food com- panies to rely on profits from sodas, which cost very little to make. However, in the aftermath of the pandemic, spend- ing habits are changing. Soda sales are de- creasing while the demand for functional drinks is increasing.

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