McDonald's Introduces McCafé+, a Rivalry with Starbucks

McDonald's shed light on its long-anticipated and unusually secretive CosMcs concept on Wednesday, finally revealing more about the café pilot that appears to be its response to Starbucks. The revelation proved to be even stranger than anticipated.

During the summer, McDonalds hinted at testing a new restaurant concept. It was revealed that the a new alien-themed concept, CosMcs, was in the works, with CEO Chris Kempczinski describing it as "a small format concept with all the DNA of McDonalds but its own unique personality." This information was disclosed during an analyst call in July.

During an investor event on Wednesday, Kempczinski finally unveiled more details. After discussing the company's plans for larger burgers and expanding the number of restaurants, Kempczinski introduced CosMcs with a Steve Jobs-inspired intro. "There is one more thing," he announced to attendees. "CosMcs."

The response: The robotic-surfing alien would launch a coffee shop to compete with Starbucks, offering even more extravagant drinks and naming it after himself.

Churro frappes and smores cold brew

McDonald's is eyeing entry into the specialty coffee market, deemed an "attractive and fast growing category," according to Kempczinski. However, he emphasized that McDonald's cannot simply introduce a plethora of new drinks to its existing menus as it would create complications in the kitchen operations and lead to slower service.

So we are trialing this innovative concept to gauge interest in customers visiting CosMcs during their afternoon slumps to purchase a churro frappe, s'mores cold brew, chai frappe burst, or any other personalized beverage. Perhaps they might even complement it with cookies, ice cream, or one of our selection of sandwiches.

Bigger burgers are coming to McDonald's.

Scott Olson/Getty Images

McDonald's CEO has announced the arrival of larger burgers. Taking a page from Starbucks' playbook with its CosMcs, McDonald's is emphasizing cold, sweet beverages that can be customized to suit individual tastes. Cold drinks constitute the bulk of Starbucks' sales, and the coffee chain attributed its increased US sales in the quarter ending on October 1 to high-priced lattes and personalized drinks.

Revamping McCafe

Investors were cautioned by Kempczinski not to become overly enthusiastic about CosMcs as it is still in the testing phase. Currently, only one location is set to open in Bollinbrook, Illinois later this week. McDonald's intends to open nine more locations, all in Texas, in the first half of next year.

McDonald's recognizes the potential for coffee not only in the test phase but also at its standard locations. "Coffee is a highly appealing category," stated Jo Sempels, who supervises markets where McDonald's has licensed its brand, earlier on Wednesday. "It is a sizable, highly profitable, rapidly growing market, with strong habitual consumption."

Sempels stated that there is still untapped global potential for McCafe. To enhance the company's coffee business, he mentioned plans to integrate McCafe into the core menu offerings and make it the sole coffee brand at McDonald's. Additionally, the company will standardize the equipment used to ensure a consistent coffee taste at all locations.

Plus, he said, the company is working on a cold coffee plan. Here, too, McDonalds may be learning from Starbucks cold drink bonanza.